Gold Is Poised to Retake a Crucial Support—and That’s Bullish for Bitcoin
Bitcoin has seen muted price action over the past few days after plunging from the $10,900 weekly highs as a result of negative new regarding BitMEX. Gold may soon be primed to retake a crucial support level on a medium-term scale, which may help to boost BTC after the aforementioned correction.
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Bitcoin Primed to Move Higher as Gold Looks to Retake Key Level
One top cryptocurrency trader recently shared this chart below, which shows that the price of gold is primed to retake a crucial support level. The level held as support on three distinct occasions over the past two months.
Gold retaking this level would likely help Bitcoin as the two markets have been quite correlated over recent months. The analyst thinks that gold retaking the aforementioned support at $1,900 will trigger an uptrend to $2,000. The last time gold traded above $2,000, BTC was trading above $11,000 and near $12,000.
Chart of gold's price action over the past few months with analysis by crypto trader Bitcoin Jack (@BTC_JackSparrow on Twitter). Chart from TradingView.com
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Fundamentals Favoring These Alternative Assets
Bolstering the positive technical trends that these assets may have, there are fundamental trends that are primed to drive both Bitcoin and gold higher.
Dan Tapiero, the co-founder of DTAP Capital and Gold Bullion International, recently remarked that structural deflation in Europe could drive Bitcoin higher. His thought was that this deflation will drive real rates in the European Union higher relative to other markets, thus driving the relative value of the U.S. dollar lower. As Bitcoin and gold both act as a hedge against declines in the U.S. dollar, this trend could boost these alternative assets:
“Massive structural deflation in Europe supports Bitcoin. Causes European Union real interest rates to geo up even as nominal rates are negative. Crushes legacy European Union banks. European Central Bank drags feet and maybe [its] hands [are] tied. Dollar falls as real rates rise faster in the European Union than in the US.”
Massive structural deflation in Europe supports #Bitcoin
Causes Eu real interest rates to go up even as nominal rates are negative.
Crushes legacy EU banks
Ecb drags feet and maybe hands tied.#Dollar falls as real rates rise faster in Eu than in US.
Supports gold and #btc. pic.twitter.com/KrpNfMIhxp
— Dan Tapiero (@DTAPCAP) October 3, 2020
Other trends that could boost the two assets, Bitcoin and gold, include the commitment to continued monetary stimulus.
Jerome Powell, Chair of the Federal Reserve, recently doubled down on commitment to 2% inflation. To do so, he said that interest rates will be kept low.
Both Bitcoin and gold stand to benefit as they are assets whose opportunity cost to hold goes down in a world with baseline or even negative interest rates.
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Photo by Lucas Benjamin on Unsplash Price tags: xbtusd, btcusd, btcusdt Charts from TradingView.com Gold Is Poised to Retake a Crucial Support—and That's Bullish for Bitcoin
OhNoCrypto
via https://www.ohnocrypto.com
Nick Chong, @KhareemSudlow