Gold Sinks as Bitcoin Price Nears Record High

In letter

  • Gold is trading at $ 1,838 an ounce, near a support.
  • Bitcoin has been buoyed by business investment and unimpressed by a Biden win.
  • Bitcoin has almost hit its all-time high since December 2017.

It seems that economic crises are the fuel for Bitcoin’s engines. While 2020 was a disastrous year for the global economy, after a lengthy bearish correction, BTC was able to regain almost all of the value it lost in 2018.

This trend has intensified in the past few days as markets remain bullish after Trump’s defeat and the launch of a COVID-19 vaccine draws nearer. Bitcoin has outperformed traditional investments, including gold, and is considered the ultimate store of value in the world of international finance.

Gold comes to earth

Events of the past few weeks have made gold less attractive as investors begin to buy stocks of companies that could soon recover from the global economic downturn, such as pharmaceuticals and logistics companies. And the charts show it.

Gold has corrected lower since August and maintains strong support near $ 1,835. Lower and lower spikes are a warning sign to hodlers. The metal has not been overbought and is moving towards a more balanced relationship between buyers and sellers.

The gold price since June 2020. Source: TradingView

But this week started ugly for the precious metal with a drop of nearly $ 45 between its daily high and its current price. Short-term traders should beware of a possible bearish breakout as the current price of $ 1,838 an ounce is dangerously close to the support.

Bitcoin wants the moon again

Bitcoin traders seem to have had enough of the 2018 crash and want to relive the past successes of 2017. The world’s leading cryptocurrency by market capitalization has been in a stable upward trend since the coronavirus-induced market crash in March 2020.

However, after a bearish September, news from major institutional investors catapulted Bitcoin to new highs. Three events in particular appear to have been crucial in moving Bitcoin from the ascent to the moon: Square’s Purchase of $ 50 million in BTC, Joe Bidens Presidential election victory, and Support from PayPal for crypto operations.

Around the time of these three events, the bullish channel became much steeper – almost like 2017 – which resulted in Bitcoin becoming heavily overbought. Literally. A recent report revealed that PayPal and Square were some kind of cause defect in the markets by buying more than 100% of all newly mined Bitcoin.

The price of bitcoin this year. Source: TradingView

If Bitcoin stays in this new channel, it could hit a new all-time high before the end of 2020.

And as institutional investment grows, many see this as a crucial factor in distinguishing between 2017 and 2020. Bitcoin is no longer a novelty created by a group of geeks. Instead, it is now viewed as a legitimate asset making its way into the financial market.