I thought it may be interesting to have a look at the Bitcoin to Gold relationship as it stands now. I have often voiced my opinion that gold and bitcoin easily and comfortably live together, each fulfilling its own purpose in the system.
The four charts below describe the current situation. The first chart comparing the US Dollar (green) to the gold price, shows the inverse relationship that has existed since June last year. Furthermore, we see a double bottom and consistent upward price movement in gold since November. I do not see an impediment until $1,975.00.
The second chart shows the relationship between Bitcoin and Gold.
Since April last year Bitcoin has underperformed gold, with sustained declines in relative value as the year has progressed. In the past week or so this has changed and a buy BTC relative to gold signal has triggered.
I think this may run a little further as I do not have any reversal signals on my system, but it looks extremely overbought at this level. I expect a reversal relatively soon.
The third chart is a clean BTC chart which shows the decline in value of the asset over the past year. The indicators reflect an overbought situation with a high likelihood of reversal in the near term.
I have no idea how far it may fall, but $15,000.00 does not appear to be an impossible number. Should it break above $21,800.00 I would reevaluate the above.
The fourth chart is just a quick rehash of a chart we published previously comparing BTC with the Nasdaq index. Notice the relatively tight correlation between the two. I worry that a collapse in the stock market may trigger a similar collapse in the crypto market. The narrative that I continually hear is that crypto’s will strengthen or save us in such a scenario, is not borne out by this chart.
|Gold : Silver Ratio||81.56:1||79.43:1|
|Gold Miners Bullish Percent Index||55.17||51.72|
(BahaUS 30 33002.00 / Gold Price ,1909.00)
|Current USA inflation rate (Dept. of Statistics)||7.1%||7.1%|
Gold’s low of the week was $1,900.00 and the high was $1,929.00, now trading at around $1,908.00. An extremely tight range.
The monthly chart for Gold is a buy and looking strong. The weekly chart is neutral looking overbought. The daily chart is neutral looking overbought and weakening.
On the Stockcharts.com charts, the blue vertical lines are our proprietary system buy signals and the red vertical lines are system sell signals – for information purposes only
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This is my interpretation of the market and is not to be taken as financial advice. Before making any buy or sell decisions I recommend that you consult with your professional financial advisor.