MarketWatch: "Why did Bitcoin and gold rise in tandem?"

Bitcoin and gold have seen strong gains over the past two months, moves that have propelled the price of the yellow metal to a new all-time high of around $2,136 an ounce, while the cryptocurrency climbed to $42,394 on Monday, its highest level since April 2022, according to Investing.com data.

Mark Connors, director of research at digital asset management company 3iQ, believes that the rally in both assets is based on hopes that the Federal Reserve has ended its rate hike cycle and is likely to start cutting rates as early as March next year, writes MarketWatch.

Traders see a more than 50 percent chance the U.S. central bank will cut the key rate by 25 basis points at its spring meeting, according to the CME FedWatch Tool. A week ago, the probability was 21.5%, according to the American publication.

Over the past month, the yield on 10-year US Treasuries has fallen significantly, down about 40 basis points, after hitting a sixteen-year high in October.

"Lower Treasury yields are good for both gold and Bitcoin," said Greg Magadini, head of derivatives at digital asset data provider Amberdata, quoted by MarketWatch. "Neither gold nor Bitcoin are interest-bearing, so the high yields on Treasury securities make them less attractive."

Magdani pointed out that gold and Bitcoin have often traded in tandem this year, including after the US mini-banking crisis in March and the outbreak of the Israel-Hamas war in October.

On the other hand, David Tawil, chairman and co-founder of digital asset fund ProChain Capital, believes that the tandem movement of gold and digital currency may just be a coincidence. "Bitcoin's rally is largely due to optimism that the US Securities and Exchange Commission will soon approve an ETF that invests directly in crypto, rather than macroeconomic factors," Tawil said, quoted by MarketWatch.

He expects the digital currency's rally to continue until the end of the year and reach a high of $47,000 by the time a Bitcoin spot asset-backed ETF is approved.

"For gold, Friday's US labor market report is important to watch," said James Harte, analyst at Tickmill Group, according to MarketWatch.

Since October 5 and until yesterday morning, Bitcoin had increased by about 52%, while for gold, an asset with lower volatility, the appreciation was 11.7%, according to data from Investing.com.