The S&P 500 is still near its all-time high, the FTSE is well below its all-time high, Bitcoin has turned down and gold is in a raging bull market. Gold and Bitcoin are driven by similar factors yet their prices are diverging. Bitcoin is sensitive to the S&P 500 movements, they tend to move together in the same direction, so why is Bitcoin down when the S&P 500 is near all-time high? It could be because crypto investors are smelling a stock market decline, in this case Bitcoin is leading the way. Gold is not positively correlated with the S&P, there are times when the S&P declines and gold rallies. This could explain the divergence between gold (up) and Bitcoin (down).
There is lots of discussion on social media about yesterday’s gold “crash”. People are not paying attention, gold is up 60% this year, a 5% drop in one day is not a crash but a simple correction in a bull market. Markets don’t go up in a straight line. The reason gold is going up is because governments around the world will have to increase borrowing/QE to help the unemployed. Gold is basically linked to AI. Accelerating AI adoption drives widespread job displacement, prompting governments to ramp up fiscal support (via debt-financed spending and potentially more quantitative easing, or QE), which erodes currency value through inflation or debasement, ultimately lifting gold as a classic hedge.