Bitcoin is currently testing a crucial support level after a 9% decline from recent local highs. The broader crypto market, alongside traditional markets, is experiencing increased volatility, driven by the ongoing conflict between Israel and Iran. This geopolitical tension is sending shockwaves through global markets, and Bitcoin is no exception.
Amid this turbulence, many analysts are focusing on Bitcoin’s growing correlation with gold as a key metric to watch. BTC, often referred to as ‘digital gold’, is showing an increasingly strong connection to the precious metal, especially in times of uncertainty.
A prominent analyst, Axel Adler, has shared compelling data and insights that highlight this positive correlation. According to Adler, the two assets move in tandem, with investors turning to them as potential safe havens during periods of global instability.
As BTC hovers near a critical support level, analysts and investors alike are keeping a close eye on price movements in the coming days. Whether BTC can maintain this support or experience, further downsides will be decisive for the crypto market and its perceived relationship with gold.
Bitcoin Volatility: The Key Difference With Gold
Bitcoin has long been considered a safe haven and store of value, much like gold, especially as it gained popularity as a separate asset class. Bitcoin and gold are often used by investors to hedge against economic uncertainty and inflation, making them popular assets during times of financial instability.
While some may view the comparison between the two as a matter of competition, one thing remains certain: there is a positive correlation between BTC and Gold.
According to CryptoQuant analyst Axel Adler, this correlation has become stronger over the past year. Adler recently shared a Bitcoin vs. Gold futures chart on Xshowing that Bitcoin and Gold have shown a positive correlation of 85% during this period.
He emphasized that both assets respond similarly to macroeconomic factors, such as rising inflation or geopolitical tensions, which drive demand for assets perceived as more stable.
However, there is a significant difference between the two: volatility. While Bitcoin and Gold often move in the same direction during uncertain times, BTC is much more volatile.
This higher volatility can make BTC more attractive to risk-tolerant investors looking for bigger gains, while gold tends to be more attractive to more conservative investors looking for stable value retention. This difference is critical for investors when choosing between these safe haven assets.
BTC tests crucial demand level
Bitcoin is trading at a crucial demand level around $60,695, and is just above the daily 200 exponential moving average (EMA) of $59,891. This EMA is a key support level and indicates strength when price crosses this level. The current price action is critical as bulls need to regain their momentum to avoid further downturn.
For the bulls to regain control, BTC needs to rise above the daily 200 moving average (MA) at $63,613, the key level to watch in the near term. A break above this level would signal a possible shift back into bullish territory and could spark a rally to higher levels.
However, if Bitcoin fails to close above the 1D 200 MA and EMA, a deeper correction towards the $57,500 level is likely. This would indicate further weakness, potentially leading to an extended period of consolidation or downward pressure. The coming days will be crucial in determining Bitcoin’s direction as investors keep a close eye on these key support and resistance levels.
Featured image of Dall-E, chart from TradingView