Investors are shifting from Bitcoin (BTC) and gold toward government debt to earn income as inflation fears build, IG Group chief market analyst Chris Beauchamp said.
Beauchamp tied the move to expectations of rising inflation and the appeal of interest-paying bonds. Bitcoin and gold do not pay interest, making them less attractive to investors seeking income from their holdings.
The U.S. inflation backdrop included a 0.4% rise in consumer prices in October, a larger increase than economists expected. Core inflation, which excludes food and energy, also ran hotter than forecast.
Bitcoin and gold can respond to different forces, including the role of real interest rates for gold and risk appetite for Bitcoin.
Stephen Coltman, head of macro at 21Shares, said AI investment may be supporting economic activity and giving the Federal Reserve room to keep rates high while it fights inflation. He said that if borrowing costs lead AI companies to reduce spending, weaker growth could prompt the central bank to change course.
Enna Lee
Enna Lee reports on investing and digital-asset markets for TokenPost. Send corrections or tips to [email protected].
