Noelle Acheson: Bitcoin "Not Really Seen As A Safe Haven Globally Yet"
The Crypto is Macro Now author on why gold is massively outperforming BTC so far this year, the heistian madness happening with physical delivery of gold, and why we might get rate cuts this year.
Crypto has a ton of tailwinds but is still waiting on the spark, Crypto Is Macro Now’s
said yesterday (February 10) on Talking Markets.And gold is… Well:
Gold Is Outperforming Bitcoin
“Gold has outperformed Bitcoin so far this year by a factor of more than two,” Noelle said. “Very unusual. Gold is the boring safe haven, And Bitcoin, not only is it the edgier safe haven, the one that appeals to the new generation of investors, but it is the one that has the tailwinds behind it, such as regulatory thaw, and growing institutional interest, not just in the US, but around the world. So there are some very contradictory messages coming out of the market that are both pointing to fundamental investment preference shifts and lingering uncertainty.”
💡”Obviously, Bitcoin will never replace gold in portfolios,” Noelle said. “Gold is thee OG of safe haven assets; Bitcoin is a complement with an edge because it represents new technology and appeals to a younger generation, but it’s a complement rather than a replacement.”
What’s Going On With Bitcoin?
There’s “doom and gloom” in crypto corners because Bitcoin is “disappointing pretty much everyone who was expecting that by now, we would have some movement given the new environment it’s swimming in,” Noelle said, and that’s leading others to think that this is the top of the cycle.
So, what are the headwinds?
“It's not really seen on a global level as a safe haven yet, despite the best efforts of BlackRock to paint it as such,” Noelle said. “Bitcoin is not that easy to understand. It is a safe haven to some, it is a risk asset to others, it is a payments channel to some, it is a new technology to others. And yes, gold is simply easier. Gold is not something your compliance department is going to have a problem with. Gold is not something you need to rewire your custody procedures for.”
Another reason is usability: “Custody is very hard, especially when you’re talking about a bearer asset. Custody of crypto is a technology, and technologies evolve,” said Noelle. “Whereas with traditional securities, it’s a process, and you actually have someone you can call when things go wrong.”
The inflows ain’t there yet: “[We don’t have] the big new inflows that we really need to get the run going,” Noelle said. “Bull runs are always driven by big new inflows… Retail aren’t ready yet, they’re not seeing the froth in the headlines because the price hasn’t been doing very much. Institutions will be first, and they’re waiting for comfort.”
Washington: “Washington does seem to be going faster, but even with best case scenario, it’s probably going to be a while before there is the crypto clarity that we’ve all been clamoring for,” Noelle said.
💡But that doesn’t mean Noelle thinks it’s much to worry about: “The current underperformance is nothing to get upset about… This takes time. The tailwinds are strong. The environment is good. It just needs the spark to get it going. And that could come tomorrow. It could come three months from now. It could come during the summer, we really don't know.”
About that spark… some positives to consider:
“Crypto is a global asset,” she said. “We’re not necessarily going to have to wait for the US news.”
“There are central banks sniffing around the idea of holding crypto, Bitcoin specifically, as part of their reserve. All it would take is one public announcement that say, Saudi Arabia have been accumulating.”
Noelle thinks 4.5% on the 10 year is “high, and should come down from there… When yields come down, that is good for assets.”
What’s Going On With Gold?
There’s been a “flood of gold leaving the UK to go over to the US, driven by two things,” Noelle said.
Fear of tariffs: Tariffs would make the transport of gold more expensive unless there is an exemption carved out for silver and gold.
A growing demand for physical delivery of gold futures - London is the world’s largest hold market but most of the derivatives activity takes place in New York, and “suddenly there’s a huge demand for physical settlement,” Noelle explained.
2 in particular is causing issues, because it involves physically packing gold up and shipping it over, and there are limits to how you can transport at a time because of insurance considerations. According to the Financial Times, there is currently a waitlist of about 8 weeks to get your gold out of the Bank of England vaults.
“That is pushing up borrowing rates, because you need the gold you can’t get from the Bank of England,” Noelle said. “So you borrow it. Borrowing rates are normally negligible because gold is safe - they’re now 10% annualized, which is ludicrous.”
Having to depend on physical delivery like this just shows how inefficient it is, Noelle said. “I've even heard one UK central banker use the excuse there was too much traffic. They couldn't get the lorries through. I mean, it is absolutely insane.”
Yes, it does all kind of sound like a heist movie waiting to happen…
Elsewhere, Noelle pointed to a potentially very interesting development in China.
“China has announced that it is going to for the first time allow its large insurance companies to start buying gold to diversify their assets,” she said. “They're allowed to buy up to 1 % worth of their assets in gold. China bought 44 tons last year. [1% of insurance company assets] would be about 280 tons. In other words, orders of magnitude more. We don't know if they will, but the fact that they can reminds us that Chinese central bank is big, but it's not the biggest player in the market. The insurance funds could make a very huge difference… [and if they do buy, that money would probably move away from] US Treasuries.”
🪢Strongly recommend you go and check out Noelle’s excellent February 10 piece on the gold market here.
What’s Going On With Inflation?
Noelle has been in the higher for longer camp for yields and inflation, but she is open to the idea that that might not be the case if Scott Bessent manages to achieve his 3-3-3 policy (3% growth, a 3% budget deficit, and a 3-million-barrel increase in daily U.S. oil production).
If he does, it could “bring down energy prices, which will feed through to price levels broadly,” Noelle said. "You’ve also got the impact of tariffs, which could lead to a stronger dollar, which would also perhaps bring down inflation, once the tariffs have been offset.”
Noelle is also now thinking we could get Fed cuts this year: “I am starting to come around to the idea that yes, we will get some Fed cuts this year. I've been saying I don't think we'll get any. I'm now thinking that we will. I'm modifying my opinion there.”
💡 Overall, there is too much uncertainty to know right now. “We’ve never been at this level of uncertainty with this kind of economic policy,” she said.
To watch the full episode, right this way.
Enjoy,
Maggie
Important Disclaimer: It is crucial to remember that this article is for informational purposes only and should not be considered investment advice. Consult with a qualified financial advisor to assess your risk tolerance, investment goals, and determine if an allocation to oil aligns with your overall financial plan.
Great episode Maggie. So much insight from Noelle
Custody is only has hard as someone wants to make it. We have more ways to hold than traditional securities but all the traditional ways to buy or hold are there. The trade offs for letting someone hold keys is tightening.