Many have likened Bitcoin (BTC) to digital gold, in that gold is the traditional asset most analogous to Bitcoin. Namely, a hardly-inflating asset which cannot just be produced by fiat, but only from strenuous work.
Many have also mused that Bitcoin, in the event of a financial crisis, would serve as a “safe haven” store of value (even though gold largely has not done).
But there doesn’t seem to be much point in denying it anymore: on at least some timeframe, crypto seems to be deeply correlated with traditional markets and the general global economy. Although the recent losses in the traditional markets have been shockingly steep, they have been even more shocking and more steep for Bitcoin – to say nothing of altcoins.
Therefore we’re wading into covering traditional assets – starting with gold. We are doing this because, if nothing else, the markets are clearly connected, and therefore knowing what the ‘rest’ (the non-crypto part) of the market is doing will perhaps be helpful to some of our readers.
Gold is breaking down with everything else, after starting to enter the vicinity of its previous all-time-high; although ultimately it’s missed that level by quite a bit.
Here on the monthly chart, its RSI trend is breaking down. This is after already dipping into overbought territory in 2019, and thus we can well imagine that gold’s trend has turned bearish. It seems likely that we’ll see $1,370 before long.
The weekly chart backs up the bearish reading, with bear divergences prominent on both RSI and histogram – although the local market structure is in fact holding so far.
Gold was going to have a rough time even before the Corona effects, as it was colliding with resistance surrounding its all-time-high.
As an often-cited proxy of Bitcoin, if not other cryptos, the performance of gold now bears watching. Because when gold starts doing well, maybe crypto will also do well – but that doesn’t look like it will happen soon.
The views and opinions expressed here do not reflect those of CryptoGlobe.com and do not constitute financial advice. Always do your own research.
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