Is Bitcoin Finally Winning its Battle with Gold? | Credit: Derek Fenech
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Key Takeaways
The Gold (XAU) price has fallen nearly 7% since its all-time high.
Bitcoin’s (BTC) price is holding on to the $107,500 horizontal support.
Will Gold’s recent decline have a positive effect on the Bitcoin price?
Gold (XAU) has finally declined, leading to questions of whether it has reached a local top.
Additionally, traders are wondering if Bitcoin could benefit from the shift.
While the assets have previously had a positive correlation, Gold’s decline could cause investors to flock to Bitcoin.
Let’s examine some charts and determine what lies ahead for the year.
Why is Gold Crashing?
The Gold (XAU) price has increased rapidly in the past two years, surging by over 115% and reaching a new all-time high price of $4,381.
Gold’s upward movement became parabolic once the price broke out from the long-term resistance at the $1,850 horizontal area (green icon), which had acted as resistance since 2011.
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During this rally, Gold has suffered only minimal retracements, a testament to the strength of its upward movement.
Despite these bullish signs, momentum indicators show extreme overbought readings since the two-week Relative Strength Index (RSI) is at an all-time high.
Bitcoin’s decline was preceded by bearish divergences (orange) in the RSI and MACD, which have been building since the start of the year.
Currently, the Bitcoin price is trading inside its most critical support at $107,000, and whether it breaks down or not could determine the entire future trend’s direction.
A closer look at the movement since the all-time high shows a completed five-wave decline (red), which suggests the crash is impulsive.
While a bounce began afterward, the price of Bitcoin failed to break out from its diagonal resistance trend line.
Even if it does, the entire rally could be an A-B-C correction that does not cause a breakout but ends at the 0.5-0.618 Fibonacci retracement resistance levels.
Interestingly, while the assets were nearly perfectly positively correlated at the start of 2024, they are not now.
Bitcoin and Gold had some periods of negative correlation, but the indicator currently shows a correlation of 0.19, which means almost no correlation.
A negative correlation would mean that the recent Gold crash could cause a Bitcoin price increase, but the indicator readings suggest that might not be the case after all.
Final Thoughts
While Gold’s parabolic run appears to be losing steam, Bitcoin’s resilience around its critical support hints at a potential shift in market sentiment.
However, the correlation between the two assets is fading, so it is unlikely that Gold’s drop alone will spark a Bitcoin breakout.
Instead, each asset may move individually without regard for the other’s price movement.
Disclaimer:
The information provided in this article is for informational purposes only. It is not intended to be, nor should it be construed as, financial advice. We do not make any warranties regarding the completeness, reliability, or accuracy of this information. All investments involve risk, and past performance does not guarantee future results. We recommend consulting a financial advisor before making any investment decisions.
Valdrin Tahiri is a cryptocurrency analyst and reporter at CCN, specializing in technical analysis with a focus on Elliott Wave theory, on-chain metrics, and fundamental research. He brings over seven years of experience in the crypto space as both a trader and writer.
He discovered cryptocurrencies in 2017 while earning his MSc in Financial Markets at the Barcelona School of Economics, which sparked a deep interest in blockchain and market dynamics. Since then, he’s contributed to top crypto outlets like BeInCrypto and CoinGape.
Valdrin also served as Community Manager of BeInCrypto’s Telegram group for three years, helping grow it into one of the largest crypto communities worldwide. His expertise in market structure and price patterns allows him to break down complex trends into clear, actionable insights.
He’s published thousands of articles covering altcoins, Bitcoin cycles, and macro trends.
