Dan Tapiero, co-founder of 10T Holdings, said weak hands were shaken in the gold market. This increases the likelihood of a gold rally in the near future, especially due to an 80-day withdrawal period.
A rally in gold and the dollar could dampen the price of Bitcoin
Bitcoin has seen strong momentum over the past three months as it hit all-time highs on Coinbase and a number of other major exchanges.
Even so, the risk of a correction for Bitcoin is a real possibility if gold rallies in line with the US dollar.
Tapiero said the largest three-week liquidation to date in the gold market increases the likelihood of an uptrend. He wrote:
“Very bullish for #gold. The biggest ever liquidation to date has occurred. Weak hands cleaned. $ 25 billion went into EM stocks, much more into US stocks. Only $ 8 billion in gold. Maybe a tiny amount in #bitcoin. #BTC isn’t big enough to be a macro asset class yet … but soon. “
Some might see gold’s rebound as a positive factor for Bitcoin in the medium term. As more and more investors recognize BTC as a store of value, the upward trend in gold could benefit cryptocurrency.
Still, there is a stronger argument that Bitcoin’s rally coincided with large gold outflows, Cointelegraph reported. This means that a big gold rally could affect BTC’s short-term momentum.
The parabolic uptrend in US stocks is another factor
The US stock market continues to rebound on the unprecedented level of liquidity from the central bank. The combination of average inflation and relaxed financial conditions has pushed stocks to all-time highs.
Best month for stocks since 1987. #DowJones pic.twitter.com/SMslJLXwHS
– Jan Nieuwenhuijs (@JanGold_) December 1, 2020
As a result, Jan Nieuwenhuijs, an independent financial researcher at The Gold Observer, reported that US stocks had their best month since 1987.
There is a possibility that the continued uptrend in US stocks could make other risky and risky assets less compelling in the short term. This could also make BTC a less urgent trade for private and institutional investors in the foreseeable future.
Currently, many traders believe Bitcoin faces a deeper drop to $ 18,600 after its recent rejection.
Michael van de Poppe, a full-time trader on the Amsterdam Stock Exchange, said the $ 19,100 drop in BTC makes a bigger drop likely due to a strong reaction from sellers. He wrote:
“US $ 19,400 as a crucial breaker could not be broken. After that, it fell towards $ 18,800. The $ 19,100 area was immediately turned down with the likelihood of a drop to $ 18,600 increasing. “
Bitcoin (BTC) is threatened with retreat as analysts expect gold to rebound significantly. The precious metal has underperformed BTC in recent weeks as the dominant cryptocurrency saw an institution-led rally.