Bitcoin–Gold Ratio Rebound Signals Potential Opportunity Window
Bitcoin (BTC) long-term price trend retraces to 2017, 2022, and 2023 shows significant reversal. The change in trend is accompanied by what analysts describe as “opportunity in danger”.
The BTC-gold ratio shows a significant difference
MN Capital founder Michael Van de Pop said that the Bitcoin-Gold ratio is showing strength after a sharp divergence with the Relative Strength Index (RSI) on the daily chart.
A higher divergence occurs when the price makes lower lows and momentum indicators such as the RSI make higher lows. The selling pressure of the setup fades.
In February, the ratio returned to the key support level near 12-13 that acted as resistance in 2017 before turning to support in 2022 and 2023. As a result, the current level of Bitcoin can serve as a potential bottom for the long-term trend of gold.
Another possible reason for this is the change in the flow of Bitcoin and gold exchange-traded funds (ETFs) over the past month.
For example, the US gold-backed ETF, SPDR Gold Shares (GLD), recorded losses of $3 billion on March 6. Kobeisi's Letter,
“This is 200% more than any previous large daily flow seen in the last 2 years.”
Meanwhile, the 30-day change in Bitcoin ETF inflows rose to $906 million in net inflows from $1.9 billion a month ago.
Related: Bitcoin Hugs 70K Range As March Fed Rate Falls Below 1%
The tenure measured in native units shows another difference. The 30-day change in Bitcoin ETF balances improved to 12,909 BTC from -34,197 BTC, while gold ETF holdings fell to 606,850 ounces from 1.4 million ounces on February 13.
Macro creates a window of opportunity for Bitcoin
According to Binance Research, the current macro volatility may present an “opportunity in danger” for Bitcoin. BTC has moved similarly to macro assets like oil and US stocks amid the US-Israeli-Iran war, which shows how global events are currently driving price action.
But despite the volatility of the capital, it will begin to return to BTC. Bitcoin's trading volume relative to US spot ETFs has recently increased, indicating increasing institutional activity.
RELATED: Three Bitcoin Binance Charts Reveal The Preparation Behind The Next Big Move
However, ETFs still represent only 9% of total BTC spot trading volume, which is lower than the 30–40% ETF-to-total equity trading in US equity markets, suggesting significant room for institutional expansion.
Historically, periods of geopolitical turmoil have also preceded strong recoveries. For example, U.S. midterm election years have market problems with the S&P 500 averaging a 16% peak-to-water decline. Bitcoin has historically fallen by 56% during those cycles.
However, the 12 months following a midterm election have not produced negative S&P 500 returns since 1939, with an average gain of 19%, while bitcoin has averaged 54% in the three years since the midterm.
According to Cointelegraph, the $78,000 level is now the key to a broad trend change in the BTC market.
This article does not contain investment advice or recommendations. Every investment and business activity involves risk, and readers should do their own research when making a decision. While we strive to provide accurate and up-to-date information, Cointelegraph does not guarantee the accuracy, completeness or reliability of any information in this article. This article may contain forward-looking statements that are subject to risks and uncertainties. Cointelegraph shall not be liable for any loss or damage arising from reliance on this information.
