Bitcoin Set For $30,000 While Gold Is Close To ATH
While the gold price surged 2.1% yesterday and is now close to an all-time high, Bitcoin price is making another attempt today to break the $28,8000-$29,000 resistance area that has been in place since mid- March. The latest macroeconomic data and a gold price that continues to thrive could provide the necessary impetus to exit the current consolidation phase.
At $2,042 an ounce, gold is just a few dollars off its 2020 high of $2,069.40. The traditional safe-haven asset is up 13% over the past month, while Bitcoin has gained 27% over the past 30 days. Thus, both assets have risen together (Bitcoin with higher beta) in recent weeks.
Digital #Goldalso known as #Bitcoinrecovered together with analogue gold. pic.twitter.com/tOH41oIKXi
— Holger Zschaepitz (@Schuldensuehner) April 4, 2023
Is Bitcoin finally proving to be digital gold?
The recent rise in gold prices is due to a weaker US dollar, lower expectations for key interest rates and geopolitical tensions, according to to analysts at The Kobeissi Letter. In addition, there are growing concerns about the looming threat of a US recession later this year.
In recent years, the inverse correlation of gold and the US dollar has been clearly evident. And it’s the same now. In recent weeks, the US dollar has been under significant pressure. Countries like Saudi Arabia, Russia and Brazil are doing business with China in Chinese yuan, not dollars. This put pressure on the dollar and thus supported the price of gold.
Meanwhile, in the US, the Federal Reserve is still grappling with a regional banking crisis that is far from resolved. This crisis resulted in the withdrawal of nearly $400 billion from US banks in just four weeks, as reported by The Kobeissi Letter.
Investors are apparently looking to safe haven assets such as Bitcoin and gold as weaknesses in the banking system become apparent. And yesterday’s macro data continues to play into both hands.
Weaker-than-expected factory orders in February and an unexpected drop in job openings to 9.931 million against expectations of 10.5 million (down from 10.824 million a month ago) are the first signs that the Fed’s tightening policy is having an impact on the job market and, by extension, the economy.
Fewer jobs on offer point more clearly than before to a cooling economy, reducing pressure on the Federal Reserve to raise interest rates.
This led markets yesterday to once again reinforce their expectation that the Fed will soon end rate hikes and start cutting them later this year, triggering the bullish trend in Bitcoin and gold. Analyst Joe Consorti wrote via Twitter:
Here it is. Fed funds futures are pricing in with less than a 50% chance the Fed will rise 25bps at the May meeting. Bad ISM data, crude demand falling, labor demand falling, rates rapidly repricing – the market smells the slowdown. Pause ⏸️
At press time, Bitcoin price rose to $28,545 following the macro conditions. After the recent spike, the $28,450-$28,500 zone needs to be defended by the bulls. If this area acts as support in the event of a retest, a recovery to $30,000 could be in the cards.
Featured Image from iStock, chart from TradigView.com