Gold Shines at Record Highs—Bitcoin and Crypto Still in the Dust

Key Takeaways

• Gold prices have continued their upward trend, nearing new all-time highs.
• The surge in gold prices reflects a risk-averse market environment.
• Bitcoin has lagged behind gold, reflecting investor preference shifting toward traditional safe havens.
• However, the halving year and the “Greentober” trends may positively influence Bitcoin’s performance soon.

As turmoil grips the markets, investors are scrambling for shelter, and the once-staid world of precious metals is seeing a resurgence in popularity.

Gold, in particular, has hit a new all-time high , its allure as a safe-haven asset proving irresistible in a climate of escalating geopolitical tensions, economic unease, and frantic market swings.

However, while the gold basks in its newfound glory, another would-be safe-haven standout, Bitcoin, is struggling to find its footing.

Despite its promise as a digital store of value and its early reputation as a haven for risk-averse investors, Bitcoin’s recent fortunes have been marked by wild volatility and a worrying lack of momentum, forcing a reappraisal of its status as a reliable bulwark against market shocks.

Gold Hits New Record

Gold prices have surged this week, nearing recent all-time highs. A decisive break above $2,531.00 would mark a new record, reflecting ongoing market resilience amidst stock market volatility.

At the time of writing, gold was trading at $2,521.91, up 0.2% in the past 24 hours. A breach of the current high would likely propel prices towards $2,550 and then $2,600.

However, a decline below $2,500 could see support at the Aug. 22 low of $2,470. Further weakness might test the May 20 high-turned-support level and the 50-day SMA, both around $2,450-$2,440.

Recent U.S. inflation data have fueled expectations for a smaller interest rate cut by the Federal Reserve next week.

The core CPI unexpectedly rose, while headline inflation slowed more than anticipated. Markets now anticipate an 85% chance of a 25-basis-point cut, up from 70% before the data.

Crypto Market Remains Behind

Amidst a risk-averse market, investors are increasingly favoring traditional safe havens like gold over Bitcoin.

CryptoQuant data  reveals a starkly negative correlation between the two assets, with gold reaching new highs above $2,500 per ounce while bitcoin has retreated over 20% from its all-time high.

The MVRV ratio, a metric indicating market overvaluation, has been below its 365-day average since late August, suggesting potential for further price declines.

This trend echoes the May 2021 market crash, when a similar MVRV dip preceded a 36% price drop.

Bitcoin’s price decline has coincided with a weakening U.S. dollar index, another indicator of broader risk aversion.

Antonio Ernesto Di Giacomo, senior market analyst at XS.com, said:

“The U.S. dollar has recently shown signs of weakness after a period of appreciation in mid-year, where it gained more than 4% against other currencies. Volatility in financial markets is expected in the coming weeks, and labor data will play a crucial role in determining the Fed’s monetary policy.”

It’s worth noting that gold has achieved multiple all-time highs this year, spaced weeks apart, while Bitcoin’s record highs were more concentrated in the first and second quarters.

The recent launch of gold and bitcoin ETFs has had a limited impact on prices, with both assets experiencing temporary gains followed by retractions.

Looming Greentober

While Bitcoin’s underperformance in September may be attributed to the ‘Redtember‘ effect—a common dip in the global cryptocurrency market, there’s a glimmer of hope as October approaches, known among investors as ‘Greentober.’

Historically, October has been a strong month for Bitcoin, with prices increasing in eight out of the past 13 years.

Nicknamed ‘Greentober,’ it often marks the recovery period after September’s downturn.

Notable rallies occurred in years like 2013 and 2021, driven by renewed market optimism, technical breakouts, and factors such as institutional interest or political stability.

In Bitcoin halving years, like the current one, October often benefits from post-halving optimism.

Halving years tend to amplify Bitcoin’s performance in October as the market responds to the reduced supply.

In 2012, Bitcoin’s price remained stable at $11.40, preceding a November surge after the halving.

Similarly, in 2016, October saw a rise from $603 to $725 as the July halving’s impact began to show.

In October 2020, Bitcoin ranged between $10,778 and $13,746. This marked the beginning of a bullish cycle fueled by institutional adoption and halving-induced scarcity.

About the Author

Giuseppe Ciccomascolo

Giuseppe Ciccomascolo began his career as an investigative journalist in Italy, where he contributed to both local and national newspapers, focusing on various financial sectors. Upon relocating to London, he worked as an analyst for Fitch's CapitalStructure and later as a Senior Reporter for Alliance News. In 2017, Giuseppe transitioned to covering cryptocurrency-related news, producing documentaries and articles on Bitcoin and other emerging digital currencies. He also played a pivotal role in establishing the academy for a cryptocurrency exchange website. Crypto remained his primary area of interest throughout his tenure as a writer for ThirdFloor.

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