Key Insights
- •Bitcoin price appears to be losing its appeal against gold.
- •A top expert hinted towards a continuation of the Bitcoin USD Vs. Gold divergence.
- •An analyst predicts a likely Bitcoin price pullback to $80,000.
The gold price has continued to outpace Bitcoin’s price in recent days, forcing many traders to reset their bets and portfolios. Besides, this has also fueled discussions over the potential reason behind the change in investors’ stance towards the assets.
Amid this, a report by a top market expert suggests that the divergence between Bitcoin USD and gold is likely to continue in the near future. While many have deemed BTC price to outpace gold previously, it seems the scenario has changed now due to macroeconomic factors.
While the precious metal has continued to stay in the green, the flagship crypto has recorded massive selling pressure in recent days. Considering that, market participants are also evaluating cues on where the flagship crypto is heading in the near future.
So, here we explore the potential reason behind the Gold Vs. Bitcoin price divergence and see what may lie ahead for Bitcoin USD momentum.
Gold Outpaces Bitcoin Price: The Underlying Reasons
The gold price has continued to surge ahead of Bitcoin price, which has fueled discussions in the market. Amid this, a recent report by Matrixport’s Markus Thielen hinted that the divergence between Bitcoin USD and gold is likely to continue in the near future, citing key reasons.
According to Thielen, the market’s expectations of a Federal Reserve rate cut on December 10 have reached 84%. On the other hand, the probability of a pause in January has risen to 66%.
However, this potential softening of monetary policy may not be enough to propel Bitcoin price forward, the report noted.
Thielen explained that the reason lies in how each asset responds to economic indicators. Gold price, which is long considered a safe-haven asset, has been closely tracking the surge in US debt issuance, making it a popular hedge against fiscal expansion and rate cuts.
As the US government continues to increase its debt, investors are turning to gold as a way to protect their wealth. This trend is evident in the recent surge in gold price, which has been steadily climbing as the national debt grows.
On the other hand, Bitcoin price is heavily reliant on liquidity entering the financial system. Despite the market’s expectations of a Fed rate cut, the actual influx of liquidity has been lacking, leaving Bitcoin USD stagnant in comparison to gold.
This disparity in performance has led to a divergence between the two assets, with gold emerging as the more attractive option for investors seeking a hedge against economic uncertainty. The Matrixport report suggests that this divergence may persist unless there’s a significant shift in liquidity.
Future Outlook for Gold and Bitcoin Prices
The gold price has traded near the $4,160 mark, with a yearly gain of 58%. This suggests that traders are putting their bets into the precious metal as a potential hedge amid macroeconomic woes.
Amid this, analyst Ali Martinez noted that the yellow metal is trading inside a symmetrical triangle. According to his analysis, a break over $4,180 resistance could spark another 10% rally in the asset’s price.
Conversely, if it loses the support at $4,041, it could witness a decline of 10%.
Meanwhile, BTC price traded near the flatline at $87,390, struggling to break through the $80,000 mark. On a yearly basis, the Bitcoin USD lost more than 6%, mostly due to the selling pressure recorded since October 10.
Amid this, expert Michael van de Poppe said that Bitcoin price may slip to $80,800 if it falls below the $85,500 support.
However, if it holds the support at $86,000, the next target would be at $90,000 or even $92,000.