Bitcoin Rallies 6% as US Treasurys Drop and Gold Rises: What’s Driving the Market?

Bitcoin (BTCUSD) rallied 6% on July 26, approaching the $68,000 resistance level amidst a backdrop of increased buying pressure on US Treasurys and a rise in gold prices. This movement comes as investors navigate a stalling stock market rally and weak real estate data, fueling interest in alternative assets like Bitcoin.

The rally in Bitcoin may seem surprising given the increased demand for fixed-income securities and gold, but the shift can be attributed to concerns about the stock market correction and weak real estate market data. Analysts point to the US personal consumption expenditure (PCE) price index, which rose 2.5% in May, aligning with expectations and favoring potential interest rate cuts by the US Federal Reserve (Fed).

Morgan Stanley’s chief investment officer, Mike Wilson, warned of cracks in the bull thesis fueled by artificial intelligence optimism and deteriorating economic growth, predicting a 10% correction for the S&P 500 in the third quarter. Tech stocks have led the recent market decline, partly due to government plans to restrict critical technology exports and profit-taking in the sector.

In the real estate market, concerns are rising as high borrowing costs deter sellers from listing their properties, leading to an increase in unsold new homes in the US South. This trend is particularly evident in Florida and Texas, where the number of newly built houses available for sale has reached its highest level in over 18 years.

Despite these challenges, Bitcoin is gaining momentum as investors start to view it as a digital gold and a hedge against monetary issuance and government debt. Recent investments by pension funds in spot Bitcoin ETFs, including the State of Wisconsin Investment Board and the State of Michigan Retirement System, highlight a growing interest in Bitcoin as a long-term investment.

While there are no guarantees in the volatile cryptocurrency market, the odds of Bitcoin breaking above its current all-time high of $73,757 are becoming increasingly favorable. Investors are advised to conduct their own research and exercise caution when making investment decisions in this rapidly evolving landscape.