Tanya Abrosimova
Independent Analyst
- Bitcoin remains under pressure as Gold hits the highest level since 2012.
- The resistance $7,000 is a hard nut to crack for Bitcoin bulls.
Bitcoin correlation with gold weakens
Bitcoin's correlation with gold has been weakening recently. The precious metal surpassed $1,700 mark for the first time since 2012 amid global flight to safety in times of economic uncertainty inspired by coronavirus outbreak. However, Bitcoin dropped below $7,000 after a series of unsuccessful attempts to settle above $7,500.
This momentum is out of tune with the recent research published by an ETF and Mutual Fund Manager, VanEck Global, at the beginning of April. The document stated that Bitcoin and Gold were increasingly correlated amid COVID-19 pandemic, which confirmed Bitcoin's safe-haven status.
However, now the prices of the tow assets are moving in opposite directions, as the correlation is fading away.
This fact didn't go unnoticed by the prominent gold bug and Bitcoin basher Peter Shiff, who reiterated his views, saying that Bitcoin will ultimately “crash back to earth.”
Over the past several years Bitcoin hodlers poked fun at gold investors because #Bitcoin gained so much more than #gold. Over the next several years those roles will reverse, but not because gold rises more than Bitcoin, but because gold moons as Bitcoin crashes back to earth.
BTC/USD: Technical picture
At the time of writing, BTC/USD is hovering around $6,800 mostly unchanged since the beginning of the day. The first digital coin recovered from Monday's low $6,570, but the upside momentum remains too weak to take BTC/USD above the psychological $7,000. This resistance is reinforced by weekly SMA100 and daily SMA50. This technical barrier has been limiting Bitcoin's upside since the beginning of April. Once it is out of the way, the upside is likely to gain traction with the next focus on $7,150 (50% Fibo retracements for the recent downside move from February 2020 high), and the highest level of the previous week $7,468.
On the downside, the initial barrier is created by $6,500 with Monday's low on the approach. A sustainable move lower will attract more sellers to the market and bring $6,000 into focus. This psychological barrier should slow down the bearish momentum; however, once it is cleared, the sell-off may be extended towards $5,800-$5,500 area, which includes 23.6% Fibo retracements for the above-said move.
BTC/USD weekly chart
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