August 15, 2020
Bitcoin’s continuous rise to its position as a significant asset on the global stage, its association with other markets has been ever-changing.
While it was strikingly associated with the stock market in late-February and early-March, its value action has since broken this, becoming more closely related to gold and other precious metals.
A fascinating spin-off of this newly formed connection to old-fashioned “safe haven” assets has been its founding an inverse correlation to the US Dollar.
When the USD’s value slopes, it provides a significant improvement to gold and Bitcoin.
One analyst clarified that he is watching a bear flag developing on the US Dollar’s daily chart, indicating that it is “getting ready to break down.”
This theoretically imminent decline would provide Bitcoin with a significant boost, and potentially allow it to ascent past its present resistance at $12,000.
Bitcoin shapes outstanding connection to Gold as “Safe Haven” comes to completion.
Early in the year, narratives neighboring Bitcoin’s potential status as a haven investment were persistent but were overturned after its price plunged during the mid-March collapse.
Around the time since, it seems that these narratives have now come to culmination, with the cryptocurrency developing a striking connection to gold and precious metals.
This period is likely due to investors becoming fearful about imminent inflation due to excessive money printing. As such, the claim for scarce assets has grown considerably.
Data from analytics platform Skew displays that the connection between gold and Bitcoin is now the closest it has ever been.
Its one-month correlation reached approximately 69% just a few weeks ago before it deteriorated to its current levels of 49%. This still shows an enormous rise for its one-month annual rolling average of 12.8%.
The USD’s Plunge may Boost BTC Higher
One trader clarified that it seems to be forming a bear flag while talking about the US Dollar’s current technical outlook.
“DXY (US DOLLAR) – prior double bottom (W) setup looking more like a bear flag getting ready to break down – would be bullish for Bitcoin and precious metals,” he said while indicating to the chart seen below.
As Bitcoin has formed a striking inverse correlation to the US Dollar, the potential drop that the analyst above is thinking could be the event that boosts BTC past $12,000 and triggers its next leg higher.