- Gold has continued to rally as the push as a hedge against inflation grows.
- Bitcoin’s growth is projected to rally in tandem with Gold, but volatility persists.
Gold broke over the $3,000 mark on Friday, hitting a record high of $3,004 per ounce. The surge in the price of the solid metal coincides with inflation concerns, rising global tensions, and demand for safe investments. This surge has brought about deeper inquiry about the implications for the price of Bitcoin (BTC).
Gold Rise, Bitcoin Drops
As Gold set a new record for the 13th time, the market capitalization spiked to over $20 trillion. The surge in the price of Gold is largely attributed to ongoing uncertainty in the global economy.
Chief among these is the recession fears surrounding the US economy, which have sent the dollar on a tailspin and spurred demand for the hard metal. This increased the odds that the Federal Reserve (Fed) would ease policy by cutting interest rates.
Contrary to Gold, Bitcoin is trading 23.3% below its all-time high, decreasing by 14.6% over the past month. In the last 24 hours, the price of BTC increased slightly by 0.9% to trade at $83,379.
Despite Bitcoin’s struggle, analysts hope the coin will follow a similar path to Gold’s meteoric rise. Following the market crash in 2020, the price of Gold and Bitcoin has often exhibited a positive correlation, which means both assets have rallied together.
Taking to the X platform, market analyst Merlijn commented, “Bitcoin’s future is written in Gold.”
The analyst highlighted that Gold and Bitcoin are following a five-step parabolic mode. He believes Bitcoin could soon see a big rally, similar to Gold’s past performance.
As a result, he projected a $150,000 price target for BTC. In a previous article we discussed, another analyst forecasted that BTC could hit a median target of $126,000 by June 1.
Pessimistic Sentiments for BTC
Not all experts agree that Bitcoin will rally in tandem with the price of Gold. Market analyst Northstar has highlighted concerns about the gold/Bitcoin ratio trend. According to the analyst, Bitcoin has fallen below Gold’s performance for the past four years.
Therefore, he emphasized that the increase in Gold’s value does not contribute much. Instead, the analyst views the move as a shift in capital investments. ByteTree founder Charlie Morris also pointed out that Gold-backed funds are seeing more investment while Bitcoin ETFs are losing value.
He shared that Gold ETFs have seen $10 billion in inflows in the last 30 days, while Bitcoin ETFs saw outflows reaching $5 billion. Still, he thinks this trend will reverse eventually, as it always does.
In South Korea, the Central Bank has rejected Bitcoin as a foreign reserve, citing volatility and associated financial risks. As highlighted in our earlier article, the government also plans to enforce strict rules on cross-border transactions using digital resources.
This move is likely contributing to the tempered outlook for BTC’s price.
Credit: Source link
