Most Popular
1. It’s a New Macro, the Gold Market Knows It, But Dead Men Walking Do Not (yet)- Gary_Tanashian
2.Stock Market Presidential Election Cycle Seasonal Trend Analysis - Nadeem_Walayat
3. Bitcoin S&P Pattern - Nadeem_Walayat
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
4.U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - Raymond_Matison
5. How to Profit from the Global Warming ClImate Change Mega Death Trend - Part1 - Nadeem_Walayat
7.Bitcoin Gravy Train Trend Forecast 2024 - - Nadeem_Walayat
8.The Bond Trade and Interest Rates - Nadeem_Walayat
9.It’s Easy to Scream Stocks Bubble! - Stephen_McBride
10.Fed’s Next Intertest Rate Move might not align with popular consensus - Richard_Mills
Last 7 days
Stocks Correct into Bitcoin Happy Thanks Halving - Earnings Season Buying Opps - 4th July 24
24 Hours Until Clown Rishi Sunak is Booted Out of Number 10 - UIK General Election 2024 - 4th July 24
Clown Rishi Delivers Tory Election Bloodbath, Labour 400+ Seat Landslide - 1st July 24
Bitcoin Happy Thanks Halving - Crypto's Exist Strategy - 30th June 24
Is a China-Taiwan Conflict Likely? Watch the Region's Stock Market Indexes - 30th June 24
Gold Mining Stocks Record Quarter - 30th June 24
Could Low PCE Inflation Take Gold to the Moon? - 30th June 24
UK General Election 2024 Result Forecast - 26th June 24
AI Stocks Portfolio Accumulate and Distribute - 26th June 24
Gold Stocks Reloading - 26th June 24
Gold Price Completely Unsurprising Reversal and Next Steps - 26th June 24
Inflation – How It Started And Where We Are Now - 26th June 24
Can Stock Market Bad Breadth Be Good? - 26th June 24
How to Capitalise on the Robots - 20th June 24
Bitcoin, Gold, and Copper Paint a Coherent Picture - 20th June 24
Why a Dow Stock Market Peak Will Boost Silver - 20th June 24
QI Group: Leading With Integrity and Impactful Initiatives - 20th June 24
Tesla Robo Taxis are Coming THIS YEAR! - 16th June 24
Will NVDA Crash the Market? - 16th June 24
Inflation Is Dead! Or Is It? - 16th June 24
Investors Are Forever Blowing Bubbles - 16th June 24
Stock Market Investor Sentiment - 8th June 24
S&P 494 Stocks Then & Now - 8th June 24
As Stocks Bears Begin To Hibernate, It's Now Time To Worry About A Bear Market - 8th June 24
Gold, Silver and Crypto | How Charts Look Before US Dollar Meltdown - 8th June 24
Gold & Silver Get Slammed on Positive Economic Reports - 8th June 24
Gold Summer Doldrums - 8th June 24
S&P USD Correction - 7th June 24
Israel's Smoke and Mirrors Fake War on Gaza - 7th June 24
US Banking Crisis 2024 That No One Is Paying Attention To - 7th June 24
The Fed Leads and the Market Follows? It's a Big Fat MYTH - 7th June 24
How Much Gold Is There In the World? - 7th June 24
Is There a Financial Crisis Bubbling Under the Surface? - 7th June 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Bitcoin, Gold, and Copper Paint a Coherent Picture

Commodities / Bitcoin Jun 20, 2024 - 07:25 AM GMT

By: P_Radomski_CFA

Commodities

Bitcoin was heralded as the new gold. But the “old” gold ultimately managed to move above its 2021 highs, while the “new” gold didn’t.
Gold didn’t disappear; they both coexist, and they both have a strong anti-dollar vibe.

Questioning Bitcoin's Rally

But… Could it be the case that bitcoin’s rally is over? It hasn’t moved to new highs after all, despite halving, which was supposed to ignite a powerful move up. It seemed like a sure bet, as it limits the supply of bitcoins. Instead, it triggered another attempt (!) to move to new highs – one that failed, too.



How come? Those who have been in the markets for longer know this – it’s because “sure bets” are already discounted in the price before the event takes place.

Think about it. If you knew that a given market was going to move higher, would you wait with your purchase or would you buy now, before this certain move takes place? Of course, you’d buy now. And so would everyone else. The rally would, therefore, happen before the actual event. And when the event finally does take place, the only thing that people can do is sell, because everyone that considered buying, already bought. There’s nobody left to buy and keep pushing prices higher.

Of course, I’m exaggerating a bit to make a point. In reality, people can also wait, which is why the sure-bet events are not immediately followed by crashes. They tend to happen after some time. Like when the SLV ETF was launched (that was a sure-bet event that was supposed to take silver to the moon) – silver price crashed, but not immediately after the event (it happened shortly thereafter, though).



Bitcoin halving was a sure-bet event, so people bought it beforehand. Some late comers bought it after it happened, but bitcoin’s inability to move to new highs and hold those levels proves that something’s not right.

Can bitcoin really fall? It’s been only rising with bigger or smaller corrections for many years… Let’s go back in time, about 25 years. Could internet stocks fall after such a powerful rally? Apparently, they could.

Bitcoin and Gold's Correlated Tops

Why am I elaborating on the situation in bitcoin today? Because it has a specific tendency to top along with gold or a bit before gold tops.



I marked the recent tops in bitcoin, and I added gold price to the chart. Bitcoin is in blue.

The late-2017 (bitcoin) and early-2018 top in gold perfectly correspond to this pattern. The same goes for the mid-2019 top. In case of the 2021 tops, the link is not as clear, but still we saw tops in bitcoin along with tops in gold, and the former topped earlier.

Perhaps 2021 is special as it was THE top in bitcoin – the one that turned out to be unbroken (at least not successfully, without an invalidation of the breakout) for years.

The early-2022 tops in bitcoin and gold were also aligned, but this time, gold formed its intraday top first. Still, bitcoin formed its final top before gold formed its final top, before sliding.

And this is where we are now: in a situation where bitcoin topped in March, and gold topped (in a double-pattern style, just like in 2011) in May – about two months after bitcoin’s top.

Since bitcoin just failed to move to new highs despite its sure-bet event, it seems that the top (a major one) in it is in. And since gold topped after that, just like it often does, it increases the odds that gold formed a major top as well.

But wait, there’s more!

Electricity is used to produce bitcoins, and copper is often involved as it’s the second-best conductor of electricity (silver is the best one). What about the link between bitcoin and copper?



As one would have expected, those markets are also aligned, and they also top at the same time.

Interestingly, in late 2017 and in early 2021, bitcoin topped slightly before copper did, and in late-2021, bitcoin topped a bit later.

And what did we see in copper recently? A massive, crystal-clear invalidation of the move to new highs. That’s an extremely strong sell signal for copper.

Given how aligned copper is with bitcoin, it’s quite likely that both markets are going to fall further – which doesn’t bode well for gold.

Moreover, gold and bitcoin are anti-dollar assets, and the U.S. dollar…



The U.S. dollar is after long-term breakout, and a prolonged verification of this breakout. The breakout took place in 2015 and the consolidation ended in 2022, when the USDX soared above the 2016 and 2020 highs.

Based on the decline that we saw in 2023, the move above those highs (marked with orange rectangle) was verified. What used to be resistance, is now support.

This consolidation also appears to have ended, as the USD Index recently broke above the declining, medium-term resistance line (marked in red). This breakout was more than verified, and it seems that the door for rallies in the USD Index is wide open.

Soaring USD Index is – of course – a factor making the anti-dollar assets less appealing. This creates a great opportunity for those willing to think differently than the majority of the investment public.

Thank you for reading today's free analysis. If you'd like to get my analysis in its premium version, I encourage you to subscribe to my Gold Trading Alerts that feature all key trading details for the current opportunity. And if you're not yet on our free gold mailing list, I encourage you to sign up today.

Thank you.

Przemyslaw Radomski, CFA

Founder, Editor-in-chief

Tools for Effective Gold & Silver Investments - SunshineProfits.com

Tools für Effektives Gold- und Silber-Investment - SunshineProfits.DE

* * * * *

About Sunshine Profits

Sunshine Profits enables anyone to forecast market changes with a level of accuracy that was once only available to closed-door institutions. It provides free trial access to its best investment tools (including lists of best gold stocks and best silver stocks), proprietary gold & silver indicators, buy & sell signals, weekly newsletter, and more. Seeing is believing.

Disclaimer

All essays, research and information found above represent analyses and opinions of Przemyslaw Radomski, CFA and Sunshine Profits' associates only. As such, it may prove wrong and be a subject to change without notice. Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are believed to be accurate, Przemyslaw Radomski, CFA and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Radomski is not a Registered Securities Advisor. By reading Przemyslaw Radomski's, CFA reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Przemyslaw Radomski, CFA, Sunshine Profits' employees and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.

Przemyslaw Radomski Archive

© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in