Bitcoin and gold seem to have an inverse relationship, recently. Cryptocurrencies peaked back in May, when Bitcoin fell over 50% from its highs of $60,000+ all the way down to $30,000. During this time, gold and silver moved up in the order of 10%-15%, massively outperforming all asset classes over the summer. But they have not really moved out of their summer range.
On Sunday, we saw gold break down below $1700/oz. on a massive $4 billion sell order, which knocked the precious metals space down on Monday as all stop-loss sell orders got activated at the same time. As soon as gold and silver broke below their key support levels, Bitcoin surged higher. It broke above its dull summer range of $30,000-$40,000, and was trading above $45,000 at time of writing — closing above the key $41,500 level, which was needed to confirm the uptrend is still in place. Those that were calling for sub-$20,000 are licking their wounds.
Fundamentals aside, charts and technicals are one of the main drivers for this specific asset class. Gold had been basing around $1800 for the longest time. It needed to break above $1850 to confirm much higher levels to come, but the charts had not been supportive over the past few months, and it was unable to break above. The same applied to silver.
But can gold and silver be looked at in the opposite way to Bitcoin? Is there really an inverse correlation trade? Over the past year, given the surge higher in Bitcoin from the lows of $4000 during March 2020, a lot of retail traders have now started following the crypto mania — chasing not only Bitcoin but various other smaller tokens as well. It seems to be an easy “bang for your buck,” and everyone wants to become a millionaire fast — especially as the Fed goes on pumping free money into the economy. Has Gold Lost Its Shine to Bitcoin? – RealMoney (thestreet.com)