Golden Opportunity

Key Takeaways

• Gold is now +34% YTD with an active breakout toward $3,700 on rate cut odds
• BTC, which typically follows but lags gold, may do better in Q4 than September
• ETH gained 20% over BTC in August thanks to strong institutional demand

‍

Digital Asset Commentary

A defining theme of 2025 has been expanding global liquidity, driven by rising debt and deficits across major economies and broad-based central bank rate cuts. Gold (+34% YTD), other precious metals, and commodities have rallied in response. Gold hit a new all-time high this week, gaining momentum after Fed Chair Powell’s Jackson Hole speech hinted at a September rate cut, with odds now at 92% per CME FedWatch. After consolidating since April, technicals point toward a measured move into the $3,700 range. Breakouts in 2024 were similarly sharp, followed by shorter consolidation phases.

Historically, Bitcoin has tended to lag gold, suggesting further upside potential. Seasonality supports this view: September is typically weak for equities and digital assets, giving gold room to lead, with BTC often following during the stronger Q4 period. BTC has also not made a new all-time high against gold since December 2024. BTC’s tight correlation to global liquidity, now near record highs, reinforces this bullish setup. In July, US M2 money supply reached a record $22.12 trillion.

BTC and ETH prices have eased slightly, with August ETF flows showing -$750 million for BTC versus +$3.87 billion for ETH. This divergence helps explain ETH’s 20% outperformance over BTC during the month. On technicals, BTC sits in neutral territory, while ETH is signaling a need for consolidation or a potential pullback. The ETH/BTC pair is also showing momentum exhaustion. ETH also remains tightly correlated with US small-cap equities, which outperformed large caps in August. Notably, ETH’s staking validator queue shows a nearly 16-day wait for both entry and exit, an overhang that may need to be cleared before prices can push higher.