Recently, a striking phenomenon has emerged in the global financial markets: a significant increase in risk appetite is reshaping the asset allocation landscape. This trend has had a positive impact on the cryptocurrency market, especially on Bitcoin.

Investors are gradually withdrawing from traditional safe-haven assets such as gold, turning instead to risk assets that may offer higher returns. In this shift of capital flow, encryption currency has become an important destination.

However, this trend is not a one-way development. Changes in market liquidity, especially policy adjustments like the Federal Reserve's interest rate hikes, could negatively impact the encryption market. A high-interest-rate environment not only reduces market liquidity but also increases the opportunity cost of holding non-yielding assets (including gold and Bit), which may lead both types of assets to face downward pressure simultaneously.

It is worth noting that certain structural changes, such as the outflow of funds from gold ETFs, may indirectly benefit the cryptocurrency market. In this case, some of the funds withdrawn from the gold market may flow into the cryptocurrency market, creating a "zero-sum game" effect.

We have also observed an interesting 'substitution effect' occurring. Gold, as a traditional safe-haven asset, is having its status challenged by Bitcoin, the so-called 'digital gold.' When the economic outlook is optimistic and market risk appetite rises, investors may be more inclined to shift funds from conservative gold to Bitcoin, which has the potential for higher returns.

However, we cannot ignore the common impact of liquidity on these two types of assets. Changes in global liquidity have a profound effect on the prices of gold and encryption currencies. When central banks adopt tightening policies, market liquidity decreases, which may lead to both types of assets coming under pressure simultaneously. The situation in 2022, where gold rose while Bit fell sharply, was closely related to the Federal Reserve's aggressive rate hike policy at that time.

Overall, the financial markets are undergoing a profound transformation, and the relationship between traditional safe-haven assets and emerging digital assets is being redefined. Investors need to closely monitor these changes to adapt to the ever-evolving global financial landscape.