The gold market could spell a “Death Cross” for bitcoin on the daily charts as it could transform its ongoing downside correction into a bear trend as we are reading more in the latest Bitcoin news today.
A death cross usually happens once an asset’s short-term moving average drops below the long-term moving average and now many analysts were looking at the crossover as a sign of the sell-off wave that leads into the long-term downside move. Gold’s 50-day moving average is now set at $1,180 while the 200-day moving average is set at $1,801. The metal’s value drop came after the positive COVID-10 vaccine news which indicates that it could cover the $79 gap between the moving averages by the next quarter which will eventually form a death cross.
A new bearish setup in the gold market could leave Bitcoin at downside risk. In retrospect, the number one cryptocurrency lags the precious metal but on different timeframes since this year, the BTC/USD exchange rate on the weekly timeframe showed evidence of tailing the XAU/USD exchange on the monthly charts. TradingShot, the analysis company, spotted many similarities using the Fibonacci retracement levels as well as the Relative Strength Indexes.
According to the charts, Bitcoin’s record highs sits near the 1.1382 Fib level which is around $25,000. The cryptocurrency risked correcting lower after hitting his goal just as gold did after establishing the all-time highs of $2,075. The analogy took cues from the similarities between the previous price trends of the cryptocurrency. Bitcoin even showed signs of correction already and had hit the best level to date at $19,873 on November 30 but now it is down by 7.74 percent, holding the $19,000 level as interim support for the price increase to the $20,000 level and beyond.
To be sure, most bullish investors expect both gold and BTC to rally higher as long as the central banks across the world will print money in order to inject liquidity into the post-COVID economies. In the meantime, the Federal Reserve committed to keep interest rates at zero and to purchase government bonds as long as it is required. Florian Kossler, the head of the strategy at Friedrich and Partner said:
“I am as bullish on Bitcoin as anybody but looking back there is a high chance that this will mark the bottom in precious metals. From a game theory perspective, I would advise owning Bitcoin, Gold, and Silver.”
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