Bitcoin’s price correction from its record high of around $ 42,000 in early January seems eerily similar to Spotgold’s in August 2020.
In retrospect, the precious metal rallied to its all-time high of $ 2,075.28 on Jan. 8. Its wild upward trend caused traders to lock in profits. As a result, the XAU / USD exchange rate started correcting lower in later sessions. The pair formed a support area between $ 1,847 and $ 1,863, which it finally broke in late November and fell to $ 1,764.
Marc Principato, CEO of digitally operated Green Bridge Investing, highlighted the growing influence of gold on the Bitcoin market in a statement published on Sunday. Just like the precious metal, the flagship cryptocurrency formed a consolidating descending channel pattern after its record high, prompting Mr. Principato to envision BTC / USD at $ 27,500.
“If 27.5,000 is compromised for our strategy, it means that wider consolidation is likely to be in play,” he added. “If you want to get a better idea of what this scenario might look like, take a look at this XAUUSD from August to December. This is NOT a prediction; It is a potential scenario to prepare for if Bitcoin chooses this path. “
So it seems that Bitcoin has copied the movements of the gold market halfway from 2020. The cryptocurrency is now testing the $ 30,774 to $ 30,188 area for a possible breakdown towards the downside support target. That level could be near $ 27,700 or $ 23,500.
“The range from 27.5 km to 32 km has so far proven to be supportive,” said Principato nonetheless.
“In the daily timeframe, there is a failed low formation in play while a new sell signal is confirmed. As long as 27.5 lasts, the probability favors an eventualitybreak out in the short term. This can happen in the next week or two, ”he added.
The analogy seemed to be reminiscent of gold’s rebound after hitting $ 1,764 in November. As the precious metal moved back up, it regained the $ 1,847-1,863 area as support, then hit session highs near $ 1,959. Nevertheless, it is now consolidating in the same area.
Bitcoin makes important comparisons with gold in terms of its safe haven, anti-inflation, and anti-fiat narratives. Many analysts, including strategists at JPMorgan and Guggenheim Partners, believe that due to its demand among millennials, the cryptocurrency would in the future capture part of the gold market with the mouse.