GoldPrice reported that on March 25th, Monday, Bitcoin tested the $67,500 support level again, while gold prices experienced their most severe correction in over 50 years. Concerns over the prolonged Iran conflict and the inflationary impact of oil prices remaining above $85 prompted investors to reduce risk asset exposure.
Meanwhile, US Treasuries faced sell-offs, indicating traders significantly increased their cash holdings. The yield on the 5-year US Treasury surged to 4.10%, hitting a nine-month high as traders demanded higher returns. As the S&P 500 index hit a low in over six months on Monday, all signs pointed to a market rushing into liquidity assets.
In the context of increasing economic uncertainty, “cash is king,” and Bitcoin faces further downside risk. Investors seem to be increasing their cash holdings either to offset recent losses or to prepare for potential further declines in risk markets. The ongoing Iran conflict has pushed oil prices above $90, intensifying inflation pressures.
According to The Wall Street Journal, the US plans to deploy about 3,000 soldiers to the Middle East to counter Iran’s influence in the Strait of Hormuz. The decline in gold prices may partly be related to weakened market expectations of the US easing monetary policy in the near term.
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