Bitcoin hit another record high in a price rally where it has already risen more than 1,100 percent from the lows in March last year. By the way, gold, which many consider Bitcoin’s best safe haven rival, has a death cross pattern painted on its daily chart.
A recent surge in long-term government bond yields, triggered by a sell-off in US bond markets as investors move towards riskier assets, dragged the price of spot lower down. The precious metal fell nearly 9 percent from its previous high of $ 1,959 an ounce.
Gold makes 50-200 MA Golden Cross on its daily chart. Source: XAUUSD on TradingView.com Gold forms 50-200 MA Golden Cross on its daily chart. Source: XAUUSD on TradingView.com
Meanwhile …
… All three Wall Street indices have reached their all-time highs. Bitcoin, behaving more like a safe haven amid market uncertainties, joined risk sentiment after Tesla, Mastercard and BNY showed support in its favor. In particular, Tesla announced that it now holds $ 1.5 billion worth of Bitcoin units and plans to use cryptocurrency as a payment mode for its services and products.
Mainstream investors, on the other hand, have dumped gold to seek positions in other commodities. BlackRock, the world’s largest wealth manager, announced on its SEC filings that it had sold 2.7 million SPDR gold stocks and redistributed the proceeds to purchase 1.18 million shares of iShares Silver Trust (SLV).
In January, BlackRock gave two of its funds the opportunity to invest in Bitcoin futures.
Holger Zschäpitz, chief financial editor of the German daily Die Welt, pointed out the possibility that investors could ditch their gold positions in order to generate returns in the Bitcoin market.
#Bitcoin eats gold on a chart! The gold / bitcoin ratio hit a new all-time low. pic.twitter.com/faWhyzYkQD
– Holger Zschaepitz (@Schuldensuehner) February 17, 2021
In his Market Outlook for Customers published earlier this month, Mike McGlone, Senior Commodity Strategist at Bloomberg Intelligence, also highlighted Bitcoin’s potential to mousetrap the gold market in the upcoming sessions. Extracts:
“In a digital world, it is logical to expect more money to flow towards Bitcoin and away from precious metals. Outflows from exchange-traded gold funds and inflows for products tracking the benchmark crypto support a possible paradigm shift. Volatility metrics also solidify the price base of Bitcoin and the potential for 100x the resistance threshold to gold. “
What’s next for Bitcoin?
With bond yields rising, expectations of a massive stimulus package rising, and the Federal Reserve remaining on its moderate course, investors would most likely prefer to risk inflating the market bubble. That could push gold further down.
“We remain positive on stocks,” Bastien Drut, senior strategist at CPR Asset Management, told FT Growth. “
Bitcoin, backed by integration with Wall Street companies as a replacement for cash, could continue to be adopted by gold and the US dollar dumpers. Nevertheless, the cryptocurrency has risen too far too quickly, which amounts to a certain downward correction.
Tesla could take a deeper correction if it trades below $ 780. Although Bitcoin remains strong, the automaker’s investors appear to have disregarded the decision to buy Bitcoin. #tesla #bitcoin pic.twitter.com/tfzRnZ5lZG
– Michael A. Gayed, CFA (@leadlagreport) February 16, 2021
The cryptocurrency was trading at $ 51,011 at press time.
