Gold has recently risen to a record high of $2,170. People like to compare Bitcoin with gold.

In the early days, the US dollar was supported by gold, so it had a negative correlation with interest rate policy. When interest rates rose, gold fell, and when interest rates fell, gold rose.

The theory is that if the U.S. dollar interest rate is not good enough, people will exchange it for gold. If the U.S. dollar interest rate is good, they will exchange gold for U.S. dollars to earn interest.

I saw a study (How interest rates affect the US dollar and gold). This picture is very interesting. When the Federal Reserve interest rates rise to the top, gold will usher in a wave of gains.

The picture below shows what the maximum profit will be when the interest rate reaches the top and the bottom of the interest rate cut is calculated.

Cycle 1: 2000-2003 - During this period, the value of gold surged by 170% as interest rates peaked at 6.5% and dropped to a bottom of nearly 1%.

Cycle 2: 2006-2009 – As interest rates peaked at 5.25% and dropped to a bottom at 0.25%, the value of gold increased by 272%.

Cycle 3: 2018-2022 – Gold’s value increased by 153% as interest rates peaked at 2.5% and fell to a bottom at 0.25%.

Fourth cycle: 2024-? (now progressive, the current interest rate has peaked in 2024)

The highest profit point will be reached within one year after the interest rate peaks. Doesn’t it feel a bit like déjà vu?

Usually, Bitcoin will reach its highest profit one year after the halving. This halving happens to occur in the same year as interest rates peak and start to fall (interest rates are expected to start cutting in 2024), which makes us more confident in holding Bitcoin.

It is possible that gold and Bitcoin will rise together this time. In fact, the positive correlation between gold and Bitcoin was not very big before.