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Bitcoin: is gold's rally a BRAKE for BTC?
By Davide Grammatica
Gold ETFs record inflow in October: as happened in 2020, price trends may suggest a bullish response from BTC
Bitcoin and gold: the road to new ATHs
Gold and Bitcoin are often lumped together as representing a form of “protection” from inflation. The deflationary nature of BTC, coupled with an increasingly long-term investor approach on the asset, leads one to think that the two assets may behave similarly amidst multiple macroeconomic dynamics, but this happens only up to a point.
While Bitcoin has long traveled in a wide range between $50k and $70k, in fact, gold is experiencing 37 percent growth in one year, on the heels of several commodities. However, some analysts have pointed to an interesting pattern, which could reoccur in the coming months based on what has happened in the past, around 2020.
At the time, gold’s rally toward its August 2020 ATH (above $2k per ounce, about €54 per gram) had anticipated the bullish run of BTC, which left toward new ATHs right around the time of an initial correction in the precious material.
ETFs dominate markets
If history teaches anything, and it is still worth appealing to market cyclicality, an upcoming correction in the gold price could finally pave the way for BTC, still struggling in its attempts to break above $70k.
Note, too, how the run of both assets depends directly on ETFs. It is precisely those based on gold that in the last week have seen a record inflow since October 2022, with demand coming largely from U.S. retail investors.
In parallel, BTC ETFs also do not stop reporting new inflows, with Blackrock ‘s IBIT increasingly at the forefront (with a total net inflow today of $23.5 billion).
Probably the most influential drag on BTC’s price movement remains the U.S. elections in November, but it is still worthwhile to focus attention on gold’s behavior.
