Monthly Outlook: Bitcoin, Big Tech, Gold

Welcome to your Monthly Outlook, where we highlight three key market trends to watch. After a volatile February marked by uncertainty, new catalysts are emerging that could shape market movements in March. Let’s take a closer look at the key factors at play.

Trump signals green light for crypto reserve

Crypto markets rallied after Donald Trump declared the creation of a strategic U.S. crypto reserve on Truth Social on March 2. The president listed Bitcoin (BTC/USD), Ethereum (ETH/USD), Solana (SOL/USD), and other cryptocurrencies as key assets for the reserve, stating:

^{Image: @realDonaldTrump, Truth Social, 2 March 2025}

He followed up on the post, stating, "And, obviously, BTC and ETH, as other valuable cryptocurrencies, will be the heart of the Reserve. I also love Bitcoin and Ethereum!"

The prices of the five mentioned cryptocurrencies and others in the broader market surged immediately after the announcement as investors speculated on its potential impact. However, the rally was short-lived, reversing sharply within 24 hours and erasing most of its gains following Trump’s confirmation of tariffs on Canada, Mexico, and China.

In our 2025 Bitcoin Outlook, we identified nation-state adoption as a key catalyst for this year, given the immense buying power governments wield compared to retail investors. While early discussions in 2024 revolved around a “Bitcoin Strategic Reserve,” the narrative has since expanded to a broader “Crypto Strategic Reserve.”

However, Trump’s post leaves many unanswered questions about the full extent of the cryptocurrencies the reserve will hold, the quantities involved, how it will be structured and managed, and what role it will play in U.S. economic policy.

Further details are expected on Friday, March 7, when Trump and U.S. Crypto & AI Czar David Sacks host the first Crypto Summit at the White House. The event will bring together top crypto founders, CEOs, investors, and members of the President’s Working Group on Digital Assets.

Big tech valuations

Bloomberg reported last Tuesday that the Magnificent Seven stocks had lost roughly $1.4 trillion in market value since December. The decline has only accelerated since, largely due to NVIDIA’s post-earnings slump. Several factors are weighing on big tech, including inflation concerns and uncertainty surrounding Trump’s proposed tariffs, which could have far-reaching effects on global trade. Three stocks drew particular interest from our clients last month: NVIDIA, Tesla, and Palantir. Each company's chart reflects market turbulence and a decline from late February into early March.

^{Chart: Year-to-date performance comparison – NVDA, TSLA, PLTR, Google Finance, 4 March 2025}

Even as big tech continues to generate strong cash flow, its valuations remain vulnerable to lofty expectations. At current levels, any disappointment in earnings, guidance, broader economic conditions, or competitor developments can trigger sharp declines. Recent moves in stocks like Palantir, which we highlighted for its momentum and potential valuation risk in January, and NVIDIA’s 10% drop following its Q4 earnings, demonstrate how quickly market sentiment can shift. For now, big tech remains dominant. However, recent volatility highlights that even the strongest companies are not immune to market corrections when expectations outpace reality. 

Meanwhile, innovation in AI and computing continues at a rapid pace. Last month, Elon Musk introduced Grok 3, which reportedly outperforms all rival AI models from Google, OpenAI, and DeepSeek. Microsoft also unveiled Majorana 1, a chip leveraging a new quantum computing architecture, underscoring the industry's ongoing evolution. For investors, the speed of innovation increases uncertainty, making it harder to determine industry leaders and where value will ultimately settle. With its significant influence on indices and the broader market, tech’s trajectory will be key in the aftermath of February’s movements.

So, are today’s valuations justified? What happens if sentiment continues to shift? How do we navigate this period as investors? These are the questions Howard Marks explores in his January investment memo, "On Bubble Watch" (also available as a podcast). The memo offers an insightful look at investor psychology and frameworks for maintaining rationality in the current market environment.

Why is gold at record highs?

Gold has been in the spotlight in recent weeks after reaching a record high of $2,956 in late February. Gold has surged 38% over the past 12 months, leading to strong stock gains for Australian gold miners. Companies like Ora Banda (OBM), Genesis (GMD), Ramelius (RMS), and Evolution (EVN) have performed strongly, all ranking among the top 15 gainers in the ASX 200 this year with YTD gains between 25% and 45%. Gold ETFs, including Perth Mint Gold (PMGOLD), Global X Physical Gold (GOLD), and BetaShares Gold Bullion (QAU), have also performed strongly.

According to a February 27 report from Goldman Sachs, gold prices are expected to rise another 8% this year, driven primarily by strong central bank demand. Since Russia’s invasion of Ukraine in 2022, central banks around the world have been increasing their gold reserves. This shift began after the U.S. and its allies froze Russia’s central bank assets, cutting it off from the global financial system. For countries like China, this was a warning sign. Holding U.S. Treasuries or large reserves of U.S. dollars comes with the risk that access could be blocked in a conflict, just as it was for Russia.

^{Chart: The People's Bank of China – Reported official gold holdings and gold as a percentage of total foreign exchange reserves (as of 31 January 2025), State Administration of Foreign Exchange, World Gold Council}

Even countries that are friendly with the U.S. could see gold as a way to protect themselves. If the U.S. dollar loses value over time, gold can serve as a hedge, helping to preserve wealth. Gold has long been viewed as a safe asset, especially during times of economic uncertainty, geopolitical tensions, and inflation. Looking ahead, potential interest rate cuts and concerns over rising U.S. government debt could further support gold prices. On the other hand, easing tensions in Ukraine, the Middle East, or higher-than-expected interest rates could put downward pressure on gold.

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Sources:

https://www.gold.org/goldhub/gold-focus/2025/02/chinas-gold-market-update-central-bank-purchases-continue-january

https://www.forbes.com/sites/alisondurkee/2025/03/02/trump-announces-strategic-crypto-reserve-heres-what-to-know/

https://www.reuters.com/world/us/trump-says-cryptocurrency-strategic-reserve-includes-xrp-sol-ada-2025-03-02/

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