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Bitcoin’s Lagging Correlation with Gold Could Push Price to $25K: Analyst

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Bitcoin tails the gold market but with a delay. And the lagging correlation now suggests that the cryptocurrency would rise to $25,000.

Analysts at independent analyst firm TradingShot highlighted the bullish fractal in their note Tuesday. They noted that Gold established its all-time high in July 2020 amid fundamentals that also supported the Bitcoin price rally. The precious metal peaked near its 1.382 Fibonacci extension level (monthly), only to pull back later.

TradingShot analysts stated that Bitcoin is on the cusp of doing the same. First, the cryptocurrency would aim to peak out near its own 1.382 level (weekly). And later, it would correct lower just like gold has done throughout the last two weeks. The Bitcoin’s 1.382 Fib level is at $25,000 — an all-time high if secured.

Bitcoin-Gold correlation since September 2018. Source: BTCUSD on TradingView

Even the Relative Strength Indicators of both gold and Bitcoin appear identical. Pitting them against one another shows that the Bitcoin weekly RSI is copying the monthly Gold RSI moves with a lag of as much as five months. That further attests to the theory of projecting the Bitcoin price at $25,000 in the coming weekly sessions.

“Bitcoin is often compared to Gold in terms of “store of value.” It has been given the name “Digital Gold.” This fundamental aspect and, technically, it tends to follow Gold’s long-term cycles on a logarithmic scale,” — the analyst asserted.

Bullish Overtones

Gold is undergoing a short-term correction because of three prime reasons.

First, the precious metal went into its overbought territory that amounted to some form of downside moves. Second, investors’ appetite for safe-haven assets reduced after Moderna, Pfizer, and AstraZeneca announced vaccines against COVID-19 with at least 90 percent efficacy.

And third, the long-delay in the second coronavirus relief bill increased demand for the US dollar. The greenback and gold have an inverse correlation.

Meanwhile, Bitcoin initially corrected lower after testing $12,500 as its ultimate resistance level. But a flurry of optimistic events, including PayPal’s foray into the crypto space, followed by its bullish outlooks by JPMorgan, Visa, and other major corporations, prompted the cryptocurrency to break out.

As of this Tuesday, the BTC/USD exchange rate was as high as $19,469.

20-30X Bitcoin Rally Ahead

Analysts agreed anticipated that the pair would move further north — above $20,000, before showing any signs of a downside correction. They also favored a long-term bullish outlook against the US Federal Reserve’s quantitative easing program that added about $16 trillion to the economy in 2020 alone.

A similar setting favors gold at higher levels. Rob McEwen, chairman of McEwen Mining, sees the precious metal going to $5,000.

If the lagging correlation stands, it will turn Bitcoin’s pullback from an all-time high into an opportunity for investors to reload and eye higher price levels. Gold investor Dan Tapeiro thinks the cryptocurrency is going to $500,000 in the long-term.

“In the next five years, I can see gold at $4,000, so that’s double,” he said during a podcast interview. “But if gold is at $4,000, Bitcoin is probably somewhere between $300,000 and $500,000, so that’s a 20, 30x.”





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Price analysis 1/22: BTC, ETH, DOT, XRP, ADA, LTC, LINK, BCH, BNB, XLM

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Bitcoin price has rebounded above a key trendline but resistance at higher levels may limit the recovery in altcoins.



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Bitcoin Posts Massive Overnight Rebound, But Bulls Aren’t in the Clear Yet

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  • It has been a wild past 24 hours for Bitcoin, with the benchmark cryptocurrency seeing one of the most intense selloffs it has seen in quite some time yesterday
  • Following a slow grind lower that had taken place throughout the past few days, BTC eventually saw a capitulatory selloff that sent its price plunging to lows of nearly $28,000
  • At this point, many investors were clearly panic selling, as funding for short positions rocketing and long-sided liquidation began stacking
  • However, this happened to mark the bottom, as BTC has since seen a massive rebound from these lows
  • One analyst is noting that there’s still a crucial level that needs to be firmly broken above before BTC can see a continuation of its uptrend

Bitcoin and the entire cryptocurrency market have been caught in the throes of some wild volatility throughout the past few days.

Fortunately for bulls, BTC’s overnight rebound appears to be the “v-shaped” recovery that many analysts have said is needed for the crypto to form a long-term bottom.

Assuming that this rebound extends further, it could confirm a macro reversal and help lead to significantly further upside. There is one level, however, that must be firmly flipped to support first.

Bitcoin Shows Signs of Strength Following Overnight Rebound 

Yesterday’s massive selloff was quite intense and, at the time, seemed like it could mark a macro reversal of Bitcoin’s uptrend.

However, Bitcoin has rebounded since, currently trading up 5% at its current price of $32,270 – marking a notable surge from lows of nearly $28,000.

Where the market trends in the mid-term should depend largely on whether or not bulls can maintain this momentum and continue printing a textbook “v-shaped” recovery pattern.

BTC’s Not Out of the Woods Yet – Here’s Why

Bitcoin still has a key level to break above and flip into support before it is fully out of the woods.

One analyst spoke about this in a recent tweet, explaining that the first “point of control” he is closely watching is $34,900.

“POC at 34900 is first area of interest at the moment. Then we’ll reevaluate.”

Bitcoin

Image Courtesy of Byzantine General. Source: BTCUSD on TradingView.

The coming few days should offer insights into the longevity and significance of the overnight rebound or whether or not it will be followed by continued downside.

Featured image from Unsplash.
Charts from TradingView.





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Harvard crypto skeptic calls Bitcoin a ‘hedge against dystopia’

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Often touted as a store of value or hedge asset, Bitcoin (BTC) has gained significant mainstream adoption over the past several months. Kenneth Rogoff, a public policy and economics professor at Harvard University, doubts the asset’s success, however. 

“I can see Bitcoin being used in failed states,” Rogoff said in a Bloomberg interview on Thursday, adding:

“It’s conceivable, you know, it could have some use in a dystopian future, but I think the governments are not going to allow pseudonymous transactions on a big scale. They’re just not going to allow it. The regulation will come in. The government will win. It doesn’t matter what the technology is.”

Bitcoin has weathered its fair share of criticisms through its 12-year history. Gold advocate Peter Schiff often comments against the technology, investor Warren Buffett once referred to the asset as “probably rat poison squared”, and financial commentator Dennis Gartman expressed skepticism toward Bitcoin in late 2020, just to name a few examples.

Bitcoin adoption has continued to grow despite the skeptics, however. The asset broke past previous all-time price highs, hitting a recent peak near $42,000 after multiple large mainstream companies publicized their BTC purchases in 2020.

“I certainly think I agree that it’s speculative,” Rogoff said of Bitcoin.

He added:

“I’ve been a Bitcoin skeptic and certainly the price has gone up, but there’s sort of an ultimate question of what’s the use. Is it just valuable because people think it’s valuable. That is a bubble that would blow up.”

“I think, over the long-run, if there’s not a use, yes, the bubble will burst,” Rogoff posited. “I hope there’s not such a valuable use but I suppose it’s a hedge against dystopia.”

In contrast, leaders in the crypto industry have presented Bitcoin as a hedge under less abnormal circumstances.