Bitcoin's BTC/USD potential to reach new all-time highs could be linked to the movements of gold, according to experts, who draw parallels between the two assets based on historical trends.
What Happened: As gold continues its upward trajectory, some analysts are looking to the yellow metal's performance as a potential indicator of when Bitcoin might experience its next major breakout, according to a Coindesk report.
Since April, Bitcoin has been trading within a wide range, fluctuating between $50,000 and $70,000.
During the same period, gold has surged by over 20%, hitting record highs above $2,700, with silver also rising by 43%.
This trend echoes patterns observed in 2020, when gold's rally eventually gave way to Bitcoin's rapid ascent.
"Bitcoin's price action has been largely range-bound for months, while gold has continued to push higher," crypto analyst Noel Saldanha told Benzinga. "In 2020, Bitcoin didn't start its significant move until gold's bullish run began to slow down, suggesting we could see a similar scenario play out."
Historical data shows that in late 2020, gold began pulling back after reaching a high of over $2,000 per ounce, just as Bitcoin started its surge from $10,000 to over $60,000 by March 2021.
This has led some to speculate that Bitcoin could be poised for a similar breakout once gold's current momentum cools.
However, there is no guarantee that the pattern will repeat itself, as gold continues to show strong demand and little sign of a slowdown.
Also Read: Bitcoin Advocates Fire Back At European Central Bank, Say ‘Vested Interest’ Motivated Criticism
Why It Matters: One key factor fueling gold's rise has been significant inflows into gold exchange-traded funds (ETFs).
Over the past seven days, gold ETFs have recorded inflows exceeding 1 million ounces—the highest since October 2022—mostly driven by U.S. retail investors through the SPDR Gold Shares (GLD) fund.
Similarly, Bitcoin ETFs have seen a boost, with U.S. Bitcoin ETF inflows totaling $192.4 million on Oct. 23 alone. BlackRock's iShares Bitcoin Trust IBIT accounted for the bulk of this activity, adding $317.5 million, pushing its total net inflows to $23.5 billion.
“Bitcoin ETFs are experiencing significant inflows, much like what we’re seeing with gold ETFs,” Saldanha said. “This mirrors the kind of institutional activity that often precedes major price movements in both assets.”
Sui Chung, CEO of crypto index provider CF Benchmarks, offered insights into the nature of these Bitcoin ETF inflows.
He highlighted that while 60% of the inflows represent directional holdings, the remaining 40% are attributed to basis trades, indicating a blend of speculative and long-term positions.
With market optimism building, some traders are eyeing the upcoming U.S. election as a potential catalyst for a Bitcoin breakout.
As political sentiment shifts, particularly with rising odds of a Trump victory, traders are increasingly optimistic about a liquidity-driven environment that could fuel further growth for Bitcoin and other risk assets.
These macroeconomic factors, alongside Bitcoin's correlation with gold, will be a focal point of discussion at Benzinga's Future of Digital Assets event on Nov. 19, where industry leaders will explore how these trends may shape the future of Bitcoin and other digital assets.
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© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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