Gold started surging substantially in March and April 2024 and reached a new record high of $2,401 per ounce. At the time of writing, gold is trading slightly lower at $2,335, as shown in Figure 1. Gold reaching high prices seems reasonable in the current state of the economy. However, the exact timing does not support this breakout. Gold flourishes in high inflation, high uncertainty, and recession ecosystems. High uncertainty is certainly true with continued geopolitical tensions, e.g. Russia-Ukraine, Israel-Palestine-Iran, etc. While there is no recession currently, indicators imply a recession for years now, which is further supported by the growing tensions around the world. High inflation was present, and inflation is still moderately high. Nonetheless, interest rates, even on a real basis, are high, which historically has shown to behave anticyclical to gold. The current view on a “higher for longer” ecosystem, which implicates high interest rates for a longer time, also does not favour gold. While uncertainty and a potential recession are valid reasons for increases in gold prices, it further benefits from the fact that the asset will likely perform well whether there is a recession or not, which not many other assets can claim. Additionally, central banks have been accumulating a lot of gold, especially China and Eastern countries. Perhaps, Eastern central banks have acquired the amount of gold Western countries are ready to sell, which leads to a shortage of supply and increasing prices.
Although oil prices were relatively steady at moderate to high levels over the past year, prices started increasing. Most recently, a potential intervention by Iran in the conflict in Israel led oil to surge further in price. At its peak in 2024, WTI crude oil traded at nearly $88 per barrel, which fell slightly to the current level of $86 per barrel, as shown in Figure 1. This decline is attributed to the current view that Iran has refrained and is expected to continue to refrain from getting involved in the conflict. Nonetheless, geopolitical tensions in the Middle East pose a significant threat to oil supply and could result in price shocks should the current situation escalate. Excluding major escalation, it is likely that oil will remain relatively stable throughout 2024 with limited upside and downside potential. The current economic situation and at least the short-term outlook appear to be beneficial for oil demand. Improved manufacturing data from the US, China, and India boost the requirement for oil. Interest rate cuts on the horizon are likely to boost economies, which also results in higher oil demand. On the supply side, the OPEC+ held the supply relatively tight to maintain moderate to high prices for oil. In case oil should move significantly higher, production would likely increase from the OPEC+, as it would push alternatives which hurts oil's long-term outlook. Nonetheless, in the case of escalations, especially in the Middle East, supply could be constrained, which could result in strongly soaring oil prices that cannot be resolved quickly.
The cryptocurrency market is maintaining the strong momentum it gained at the beginning of the year. Bitcoin (BTC) is spearheading the lead in the space. BTC soared to above $73k as of the time of writing and surpassed its previous high of $68k achieved back in 2021. To date, BTC is up 70% in 2024. The most notable reasons for the strong performance are the spot BTC ETF approval and the subsequent money flowing into BTC. For example, BlackRock now owns more than $10bn in BTC. Another key driver is the upcoming Bitcoin Halving that is anticipated to occur in mid-April 2024. Historically, this event starts the strongest bull run in the BTC cycle. Thus far, BTC was among the best-performing crypto assets in 2024, but Ethereum (ETH) managed to overtake BTC over the past few days and gained 78% in 2024. This development is also akin to prior cycles, when BTC typically initiates the bull run, while other tokens follow BTC and post stronger gains further in the bull run. However, unlike BTC, ETH has not managed to surpass its previous high of nearly $4.9k from 2021. Most recently, ETH surpassed the $4k for the first time since 2021. Figure 1 shows the price development of BTC and ETH from the end of 2022 to March 2024 alongside each token's previous high. Corresponding to these trends is the development of the crypto market capitalization. With the major currencies being close to or above their previous highs, the total cryptocurrency market cap is also close to a new record high. As of the time of writing, the crypto market cap is above $2.7tn, which is slightly lower than its previous high of $2.8tn.
Cryptocurrencies started phenomenally in the year 2024. To date, Bitcoin (BTC) is up almost 50% in 2024 after soaring around 160% in 2023 already. On 28th February 2024, BTC managed to surpass the $60k mark and peaked at nearly $64k. With the Halving on the horizon, BTC will likely surpass its previous record high of $68k set in November 2021. Ethereum (ETH) and other altcoins are following the price development of BTC after the most recent hype around the BTC ETF approval showed a relatively small impact on other coins. ETH is also up almost 50% in 2024, at the time of writing. ETH is currently trading at $3,385, levels last seen in early 2022. While BTC is already relatively close to its record high from 2021, ETH is still quite far away from its record high of $4.8k from November 2021. The growth of Solana (SOL) has slowed in 2024, gaining only 16%. Nonetheless, the current level of $118 was last seen in early 2022, when the token crashed substantially amid the general crypto crash and reliability issues of the network. Although the growth over the past two months has not been exceptional, this is more than compensated by the 10x return in 2023. While BTC and ETH show a tendency for a new record level soon, SOL still needs to grow substantially to overtake its previous record high of $260 in November 2021. Figure 1 shows the price development of the three coins from the end of 2021 to February 2024. The most recent surge in prices also resulted in the market capitalization of cryptocurrencies rising above $2tn for the first time since early 2022. Currently, the market cap of the industry lies at $2.33tn.
Cryptocurrencies started phenomenally in the year 2024. To date, Bitcoin (BTC) is up almost 50% in 2024 after soaring around 160% in 2023 already. On 28th February 2024, BTC managed to surpass the $60k mark and peaked at nearly $64k. With the Halving on the horizon, BTC will likely surpass its previous record high of $68k set in November 2021. Ethereum (ETH) and other altcoins are following the price development of BTC after the most recent hype around the BTC ETF approval showed a relatively small impact on other coins. ETH is also up almost 50% in 2024, at the time of writing. ETH is currently trading at $3,385, levels last seen in early 2022. While BTC is already relatively close to its record high from 2021, ETH is still quite far away from its record high of $4.8k from November 2021. The growth of Solana (SOL) has slowed in 2024, gaining only 16%. Nonetheless, the current level of $118 was last seen in early 2022, when the token crashed substantially amid the general crypto crash and reliability issues of the network. Although the growth over the past two months has not been exceptional, this is more than compensated by the 10x return in 2023. While BTC and ETH show a tendency for a new record level soon, SOL still needs to grow substantially to overtake its previous record high of $260 in November 2021. Figure 1 shows the price development of the three coins from the end of 2021 to February 2024. The most recent surge in prices also resulted in the market capitalization of cryptocurrencies rising above $2tn for the first time since early 2022. Currently, the market cap of the industry lies at $2.33tn. |
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