Analysis: The expectation of interest rate hikes impacts all hedging tools, with Bitcoin and gold prices falling in sync
According to CoinDesk, Bitcoin and gold fell simultaneously as the market bets on rising interest rates suppressing non-yielding assets. Bitcoin dropped about 7% this week, while gold fell below $4,200 per ounce. The rebound was mainly driven by short covering, with over $500 million in bearish bets liquidated in the past week, while spot demand has not significantly returned. Traders are focusing on Wednesday's U.S. inflation data and the policy stance of the new Federal Reserve Chairman Kevin Warsh. If inflation remains high, it could prompt interest rates to stay elevated, further suppressing risk assets. The rare simultaneous decline of Bitcoin and gold undermines its rationale as a macro hedge tool.
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