Bitcoin Steady, Gold Tokens Shine as XAU Hits Record High; Inflation in Tokyo Rises

Bitcoin Steady, Gold Tokens Shine as XAU Hits Record High; Inflation in Tokyo Rises

BTC Takes a Breather as Trump's Tariff Threat Fuels Gold Surge, Tokyo Inflation Supports BOJ Rate Hikes

By Omkar Godbole | Edited by Parikshit Mishra January 31, 2025, 6:00 a.m. UTC

Bitcoin (BTC) has hit a standstill, just 5% shy of record highs, while gold continues its upward momentum, with concerns over U.S. import tariffs driving traders to borrow the precious metal. The rise in Tokyo inflation also strengthens the case for continued rate hikes by the Bank of Japan (BOJ), which has led to a stronger yen.

BTC's Rally Stalls, but Market Sentiment Remains Bullish
Bitcoin's price recently hovered near $104,400, falling just 4.7% short of a new all-time high, according to CoinDesk data. While some traders anticipate a sell-off before BTC’s next big move, the derivatives market remains confident in BTC’s continued bullish outlook. Despite President Trump’s tariff threat causing some market uncertainty, a rise in demand for safe-haven assets like gold and gold-backed tokens has been noted.

Nick Forster, founder of decentralized on-chain options platform Derive.xyz, noted that while some crypto analysts expect BTC to drop before surging toward $250K, the market sentiment remains optimistic. Deribit and CME flows show continued bullish momentum, with expectations building around potential state-level BTC reserves in the U.S.

Gold Hits Lifetime High as Tariff Concerns Push Investors to Safe-Havens
Gold soared to a record $2,799 per ounce on Friday, marking a 6.5% gain for the month. This rise is attributed to traders scrambling to borrow gold, driven by reports of increased deliveries to the U.S. and fears over Trump’s threatened tariffs. As a result, gold-backed tokens like Tether Gold (XAUT) and PAX Gold (PAXG) also surged, with XAUT reaching a lifetime high of $2,796 on Bitfinex.

Jeroen Blokland, founder of the Blokland Smart Multi-Asset Fund, pointed out that gold’s price surge against fiat currencies suggests potential currency devaluation, which could drive increased demand for alternative investments like cryptocurrencies.

Tokyo Inflation Surge Supports BOJ Rate Hikes, Strengthens Yen
Consumer inflation in Tokyo, a key leading indicator for nationwide trends, accelerated to 2.5% in January from the previous year. This uptick is expected to lead to further rate hikes by the Bank of Japan (BOJ), which recently raised its policy rate to 0.5%, the highest level in over 16 years.

This inflation surge and subsequent strengthening of the yen could have destabilizing effects on riskier assets, as seen in August 2024. The Australian dollar/yen (AUD/JPY) pair is already showing signs of a downward trend, signaling possible broader market risk-off sentiment.

As the situation develops, all eyes will be on how the evolving global economic and geopolitical landscape impacts both traditional and crypto markets.