Is gold Bitcoin’s crystal ball?
In my last article, I wrote about the current unique relationship between gold and BTC. This correlation is one where gold leads BTC by four months. It began at the start of the pandemic and continues still. My mid-term forecast for Bitcoin futures using this relationship can be summed up in a quote from the article published September 13th -
“Bitcoin is in the midst of a correction that could take it to below support at $44,000 down to the next level of support at $40,000 before a slight upside bounce followed by an even lower low (somewhere around $35k - $30k) before recovering back to where current pricing is now around $45,000.”
The first piece of this three-part forecast has officially come to fruition today when BTC futures achieved an intraday low of $40,085. The next part of the forecast involves BTC trading off the support level at $40k (this could occur tomorrow or two weeks later), trading to a lower high than the previous ($53,000), possibly reaching $45,000 - $48,000.
By the close of East Coast markets, BTC has recovered quite a bit from the above-mentioned lows but is finding resistance near the 50 and 200-day moving averages. These moving averages had served as effective support for Bitcoin futures just yesterday. However, BTC was able to close back above the 100-day M.A. and, most importantly, $40k.
Precious metals and the metaverse
Suppose BTC continues down the same path behind gold as it has, then expect a fall to bellow major support at $40k after a relief rally, bringing BTC to higher pricing but a lower high. Only then will we see a dip below $40k. If the synergy remains, we should see all of this play out by the end of October.
Although I am convinced that there is some magnetism between the normally non-magnetic gold and what is often portrayed as its direct rival, Bitcoin. I am not sure what is causing this it could be as simple as cyclical shifts in market sentiment from risk-on to risk-off. Whatever the cause traders should use this knowledge to their benefit for as long as the synergy remains.