Safe Haven to Crypto- Why are All Asset Classes Booming Together?

In a financial world where fiat currencies are losing their value, investors are on the hunt for assets that can preserve their wealth. From gold to cryptocurrencies, safe havens are seeing a surge in demand, which in turn drives their value. Other asset classes, including risky assets, real estate, global bond yields, and many more, are also in growth. But what's behind this trend?

All Asset Classes Booming, But Fiat Fails

In a recent X post , The Kobeissi Letter shared a concerning yet interesting shift within the global financial space. According to the commentator’s insights, all asset classes are witnessing a massive surge in recent days. The post read,

“When EVERYTHING is at all time highs, you need to ask yourself something: What has changed? Safe havens, risky assets, real estate, crypto, global bond yields, and everything in between is hitting daily record highs.”

Currently, the crypto market is experiencing a major rebound, with Bitcoin hitting a new all-time high of $125k. The precious safe haven- gold- has also hit its record levels amid the prevailing US government shutdown. Notably, a primary reason for this shift is the changing investment sentiment and debasement trade, where traders flock to safe-haven assets like Bitcoin, gold, and silver amid economic uncertainty.

But what’s behind the growth of other asset classes? As noted by The Kobeissi Letter, all classes, including risky assets, real estate, and global bond yield, are also showing impressive gains along with safe havens and crypto. This growth sparks speculations, with many wondering what’s driving this trend.

Safe Haven Shifts

In a related trend, investors are choosing cryptocurrencies like Bitcoin as a safe haven amid economic woes. While gold stays high-headed, BTC is also in the race, especially as it hit a new ATH amid the US government shutdown. Standard Chartered's Geoff Kendrick said,

“The shutdown matters this time around. During the previous Trump shutdown (22 Dec 2018 to 25 Jan 2019) Bitcoin was in a different place than now, so it did little. However, this year bitcoin has traded with 'US government risks' as best shown by its relationship to US treasury term premium.”

Denominator Declines

As an answer to this question, the commentator posited that the major reason behind the surge in all asset classes is the downfall of fiat currencies. They wrote, “The denominator for most assets, in this case the US Dollar, is what has changed.”

Significantly, the USD is poised for its worst performance in over 40 years, having already dropped around 10% year-to-date. This decline has a dual impact on asset prices. On one hand, the intrinsic value of stocks, real estate, and cryptocurrencies is increasing, driving their prices up.

On the other hand, the weakening US dollar means that the value of these assets is further amplified when denominated in dollars. As a result, confidence in fiat currencies has reached a multi-decade low, prompting investors to seek alternative stores of value.