(Kitco News) – The cryptocurrency ecosystem is continuing its post-election rally on Monday as Bitcoin (BTC) surged to yet another all-time high while stocks enjoyed a positive open. Precious metals, on the other hand, extended the sell-off that began once Trump’s victory looked assured on Tuesday evening, with both gold and silver declining well over 2% on the session.
Bitcoin's run of fresh highs continued over the weekend, as it tested resistance at the $80,000 level multiple times on Sunday morning before finally breaking through definitively just after noon EST. After a brief pullback to retest the $79,000 support level around 3:45 p.m., it retook 80k and pushed higher still, breaking through $81,000 just after 8:00 p.m. EST, and $82,000 by 5 a.m. Monday morning.
As has often been the case since Trump's reelection, the North American session open once again provided fresh momentum for King Crypto, as it rocketed from $81,680 at 9:30 a.m. to a fresh high of $82,620 just 11 minutes later, and set a new all-time high of $84,440 just after 10:30 a.m. EST.
BTC/USD Chart by TradingView
At the time of writing, Bitcoin trades at $84,007.72 for a gain of 4.45% on the 24-hour chart.
Are BTC, stocks overextended?
Mike McGlone, Senior Commodity Strategist at Bloomberg Intelligence, expects equities and Bitcoin to outperform gold in the near term, but believes they may be pushing into overextended territory.
“Record highs for the US stock market and Bitcoin, on the back of the election of Donald Trump, may face the reality of extended markets and, as Benjamin Disraeli said, what we anticipate seldom occurs,” he wrote in an update on Monday morning. “Our graphic shows how low Bitcoin was vs. beta and gold with the S&P 500 hovering near its 100-week moving average when Trump was elected eight years ago. Now the stock index is stretched to a more-than 25% premium and the ratios of the crypto vs. the metal and S&P 500 seem to be trying to catch up, after peaking in 2021.”
“Will Bitcoin resume outperforming and rise to new highs vs. gold and beta or succumb to mean reversion? It's the human nature of positioning for what worked last time that might elevate back-and-fill risks,” he warned. “Bitcoin appears more likely to outperform gold, as long as the stock market keeps going up.”
McGlone noted that the Bitcoin-to-Beta correlation is high, while gold's is low. “Bitcoin's 60-day correlation to the S&P 500 at about 0.60 is the highest ever on the way up, and may suggest what's driving the crypto,” he said. “Juxtaposed is gold's connection to beta closer to zero as of Nov. 8, showing Bitcoin has been trading more like a leveraged version of beta than a digital version of gold. Our graphic depicts the propensity for Bitcoin in ounces of the metal to lead the stock market, and both put in highs in 2021, on the back of the biggest money pump in history. But at 28x, the Bitcoin/gold ratio is the same as first traded about three years ago, despite the record-setting S&P 500.
"Will the crypto catch up under a second Trump administration?" he asked. "The launches of futures in 2017 and US ETFs in 2024 were Bitcoin's migration into the mainstream milestones, and may signal its best performance days are in the past.”
McGlone believes that the increasing disparity between the surging U.S. stock market and the languishing Bitcoin/gold ratio means King Crypto’s days of big gains could be coming to an end. “Or is Bitcoin poised to catch up and renew its propensity to outperform the precious metal? Our graphic shows a top potential headwind for most risk assets: if beta backs up,” he wrote. “The ratio of the most widely 24/7-traded speculative risk asset vs. the store of value has acted as a leading indicator, and Bitcoin/gold at about the same as in 2021 is relatively low vs. the S&P 500.”
“Bitcoin-to-beta risks may be similar to copper, he added. “Both typically face headwinds when the stock market declines and correlations to the stock index are quite elevated. At about 3x vs. gold and the S&P 500, Bitcoin's high annual volatility may portend greater risks for the crypto if volatility rises.”
Precious metals melt as risk-on prevails
Gold and silver continue to move in the opposite direction of Bitcoin and other risk assets on Monday, as each new high for BTC is followed by a fresh low from the metals.
Gold is approaching the $2,600 support level on Monday morning. Spot gold last traded at $2,615.25 per ounce and is down 2.57% on the daily chart.
Meanwhile, silver prices have broken below $31 per ounce level and hit a low of $30.449 shortly after 10:30 a.m. EST. Spot silver last traded at $30.515 per ounce for a loss of 2.42% on the session.
