Ongoing economic and geopolitical tensions have fueled demand for safe inventory assets with Bitcoin, gold and Swiss francs in the driver’s seat.
Bitcoin (BTC) prices have recently been pulled back, but remain far higher than their lows since the start of the year. Bitcoin ETFs also continue to add assets this year, with cumulative inflows increasing by $54 billion since January last year.
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Bitcoin, gold and Swiss francs jumped this year. The US dollar index has plummeted by more than 10% from the previous day. The three assets have become safe assets amid increasing risk.
High geopolitical and economic risks
The US economy shows signs of stagflation as consumer and producer inflation continues to rise. The US Consumer Inflation Rate (CPI) rose from 2.4% in June to 2.7% in July. Core CPI, excluding food and energy, has accelerated to 3.1%.
U.S. employment growth is also slowing, according to data released Friday. The economy added just 22,000 jobs in August, but the unemployment rate moved to 4.3%. This is the highest level since the pandemic.
Economists hope that upcoming inflation reports will show that the headline consumer price index will rise to 3% in August, continuing its trend that has continued for several months.
Therefore, economists hope that the Fed will cut by 0.25% in future meetings. Stagflation reduction rates risk increasing inflation in the coming months.
As trade relations between the US and other countries deteriorate, so has the demand for safe haven assets has skyrocketed. India, for example, is reportedly allied with China for the Trump administration’s tariffs.
Another significant risk was the threat to the independence of the Federal Reserve. Trump is considering firing Fed Chairman Jerome Powell and recently fired Lisa Cook to achieve lower interest rates.
Bitcoin, Swiss franc and gold are rising sharply
These risks explain why the US dollar index plummeted, moving from an annual high of $110 in January to today’s $97.73.
At the same time, gold prices have surged to record highs recently as ETFs added a significant inflow in the past few months. China’s central bank has purchased gold for the past 11th consecutive month, bringing its holdings to a $74 million troy ounce. Goldman Sachs analysts have seen gold prices reach $5,000.
The Swiss franc has also become a safe haven as it surged 13% against the US dollar. Investors love low-yield francs because of Switzerland’s stability, neutrality and low public debt.
