Bitcoin Spikes Up Over $42,000, Shows A Correlation With Gold

The price of Bitcoin is rising in tandem with the price of gold, indicating that investors are bracing for volatility in the stock market as the precious metal reaches a new all-time high.

On Monday, December 4, the Asian session saw the price of gold breach the crucial $2,100 mark, setting a new record. For the first time in 19 months, Bitcoin (BTC) has also increased above $42,000 in the interim.

Source: CoinMarketCap

Bitcoin has triumphantly returned to the $40,000 mark, a level not seen since April 2022's peak. This featured a quick 4% increase in less than a day, indicating the cryptocurrency's 19-month top.

Furthermore, since the start of the year, Bitcoin has increased by more than 140%.

Markus Thielen, chief of research at Matrixport, has insights that point to an even more promising future. With the backdrop of forthcoming Bitcoin halving events and historical patterns of post-bear market bull cycles, forecasts place Bitcoin at over $60,000 by April of the following year and as high as $125,000 by the end of 2024.

These forecasts, which call for a rise of more than 200%, are based on the historical trend of price increases preceding halving events.

The possible approval of a spot Bitcoin exchange-traded fund (ETF) in the US fuels the speculative winds even more. There are currently 13 proposals, including those of major players in the market like BlackRock and Grayscale, and the Securities and Exchange Commission (SEC) is expected to make a judgment soon.

By January 10, Bloomberg's ETF analysts believe there is a good chance that all pending bids will be approved simultaneously. This would not only usher in a new phase of institutional investment in Bitcoin, but it would also probably lead to an increase in the price of the cryptocurrency.

Regarding the recent highs in the price of gold, Bitcoin analyst Willy Woo stated on X that "it's very likely we are on the eve of a Bitcoin spot ETF." SPDR Gold Trust was the first commodity ETF. It gave investors an easy method to include gold in their portfolios.

“When it launched, gold went on to an 8-year rally with no single down year between 2005 - 2012,” Woo concluded.

As a result, the recent surge in Bitcoin prices above the critical $40,000 threshold is indicative of a bullish market attitude driven by the likelihood of a Bitcoin ETF being approved in January as well as the expectation of regulatory improvements generally. In contrast, it is anticipated that the halving of Bitcoin would only strengthen the currency's price throughout the following five months.

Is Bitcoin a strategic asset of national importance?

Meanwhile, according to U.S. Space Force member Jason Lowery, the United States has to formally study employing proof-of-work networks like Bitcoin (BTC) to defend the nation against cyber-inflicted warfare.

Lowery said that although most people view Bitcoin as a "monetary system" for securing dollars, very few are aware that it can also be used to safeguard "all forms of data, messages, or command signals". He sent a four-page letter to the U.S. Defense Innovation Board on December 2, further explaining Bitcoin’s importance.

The U.S. Military can now benefit from Silicon Valley's technological innovation and best practices thanks to the independent advisory board known as the Defense Innovation Board. Lowery used the letter to request that the Secretary of Defense be advised to look into the "national strategic importance" of proof-of-work systems such as Bitcoin by the board.

In the letter, Lowery urged the board to recommend to the Secretary of Defense that PoW systems such as Bitcoin be looked into for their "national strategic importance."

Lowery explained in his letter that, similar to how military assets serve to deter military attacks against the nation, a proof-of-work system like Bitcoin could be effective in discouraging adversaries from hacking attacks due to the "steep costs" of a system that could crack a blockchain and perform an attack.