## Bitcoin’s Next Breakout Could Be Linked to Gold: Experts See Historical Parallels
The cryptocurrency world is abuzz with speculation about Bitcoin’s next big move, and experts are turning their attention to gold for clues. A growing number of analysts believe that Bitcoin’s potential to reach new all-time highs could be closely tied to the movements of the precious metal, based on historical trends.
Echoes of 2020:
Since April, Bitcoin has been trading within a range, fluctuating between $50,000 and $70,000. While Bitcoin has been consolidating, gold has been on a tear, surging over 20% and hitting record highs above $2,700. This mirrored a similar pattern in 2020 when gold’s rally preceded Bitcoin’s rapid ascent. As gold’s momentum began to slow down in late 2020, Bitcoin experienced a breakout from $10,000 to over $60,000 by March 2021.
Gold’s Influence:
Crypto analyst Noel Saldanha believes that the current scenario could be similar to 2020, highlighting that “Bitcoin’s price action has been largely range-bound for months, while gold has continued to push higher.” This pattern suggests that Bitcoin could be waiting for gold’s momentum to cool before making its own major breakout. However, it’s important to note that while historical data provides insights, there’s no guarantee that the pattern will repeat.
ETFs Fueling the Trend:
The surge in gold prices is being driven by significant inflows into gold exchange-traded funds (ETFs). Gold ETFs have recorded inflows exceeding 1 million ounces in the past seven days – the highest since October 2022 – fueled largely by U.S. retail investors investing in the SPDR Gold Shares (GLD) fund. Interestingly, Bitcoin ETFs are also experiencing similar inflows, 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 and pushing its total net inflows to $23.5 billion.
Institutional Interest:
This surge in both gold and Bitcoin ETFs suggests a shift in market sentiment, driven by increased institutional interest. Sui Chung, CEO of crypto index provider CF Benchmarks, observes that while 60% of the inflows represent directional holdings, the remaining 40% are attributed to basis trades, indicating a mix of speculative and long-term positions. This combination of investment strategies adds further fuel to the potential for Bitcoin’s future growth.
The U.S. Election as a Catalyst:
With market optimism growing, the upcoming U.S. election is being seen as a potential catalyst for a Bitcoin breakout. Traders are particularly optimistic about a liquidity-driven environment, fueled by rising odds of a Trump victory. This optimistic outlook could further propel the growth of Bitcoin and other risk assets.
Looking Ahead:
The correlation between Bitcoin and gold, coupled with macroeconomic factors, will be a hot topic at Benzinga’s Future of Digital Assets event on Nov. 19. Industry leaders will discuss how these trends may shape the future of Bitcoin and other digital assets. As the crypto world awaits Bitcoin’s next big move, the relationship between Bitcoin and gold remains a key area of focus for investors and analysts.
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