The closing of the annual financial year in the markets is approaching and bitcoin is arriving first to cross the finish line. The cryptocurrency has surpassed the $42,000 barrier in recent hours, the highest price since April 2022. This year its revaluation is close to 150%. Nobody surpasses it, although it is in a head-to-head with orange juice futures, which point to similar growth.
This result comes after the collapse of Sam Bankman-Fried’s FTX platform and the prosecution of Binance founder Chanpeng Zhao. In the crypto world, it is considered that the outbreak of these two cases, despite the media stir they caused, contributed to cleaning up and restoring confidence in an investment that, in any case, remains very volatile. Suffice it to think that the famous cryptocurrency was also the asset that appreciated the most… in 2019!
Another investment that shines with its own light is gold. The yellow metal continues its upward phase and by mid-afternoon on Monday it exceeded $2,022 per ounce, a historical maximum that is above the mark that was touched during the pandemic. Beyond its traditional role as a safe haven value (with the wars in Ukraine and the Middle East far from over), other factors come into play, such as its intrinsic value. “It is becoming more and more difficult to extract gold, due to the increase in energy bills. Also for every amount of earth extracted, less metal is found. This explains why mining companies are suffering,” explains Xavier Brun, professor of finance at UPF and manager at Trea Asset Management. As for bitcoin, this analyst adds, its rise confirms the inverse relationship with North American fixed income. When 10-year bond yields decline, cryptocurrencies rally.
The good performance of gold and bitcoin has a common cause: it is a reflection of investors’ commitment that interest rates will fall throughout 2024 and that the market is looking for alternatives that offer higher returns.
This strategy is also visible in the good stock market performance, after an excellent close in November. A trend that even made the vice president of the ECB, Luis de Guindos, wonder if the optimism in the stock market is not even excessive. “In the US, the rise is largely due to technology companies, which are registering profits. In Europe, the upward cycle of interest rates, on the other hand, has benefited banks,” says Brun.
Another surprise that benefits the markets is the relative containment of oil, after the announced production cut by OPEC last week. In this case, the operators doubt that the reduction in supply will be effective and that all the cartel countries will respect the instructions of Saudi Arabia. Both the Brent variety in Europe and the Texas variety (in the US) have recorded declines. Crude oil has fallen 3% so far this year.
