The optimism for the prezzo di Bitcoin is challenged by the decline of the copper/gold ratio, an indicator of risk aversion. Furthermore, the global economy and the trend of the markets could influence the path of BTC in the near future. All the details in the article.
The price of Bitcoin is rising, but the collapse of the copper/gold ratio leaves doubts about investor optimism
The trend of global financial markets and the expectations of further economic developments have a significant impact on risk assets, including cryptocurrencies like Bitcoin (BTC).
While the attention of crypto investors is focused on the 2024 U.S. elections and the possibility of rate cuts by the Federal Reserve, the trend of the copper/gold ratio shows signs of potential risk aversion.
The decline of this ratio could foreshadow turbulence for speculative assets and for the global economy. Thus inevitably influencing the trend of the price of Bitcoin (BTC).
The growing interest in criptovalute is partly due to the support of influential political figures and the attention of authorities like the Fed.
The possible victory of the pro-crypto candidate Donald Trump in the upcoming presidential elections, combined with the expectations of interest rate cuts, fuels investors’ hopes for a bull trend recovery of BTC.
However, the copper/gold ratio, a fundamental metric that calculates the price of copper per pound divided by the price of gold per ounce, has fallen to the lows since 2020. Consequently raising concerns.
This report, monitored by analysts and investors as an indicator of global economic health and risk appetite, has decreased by over 15% since the beginning of the year. In other words, recording the sharpest loss since 2018.
Copper, known for being an industrial metal, tends to perform positively when the global economy is expanding. Gold, on the other hand, is seen as a safe haven in times of economic uncertainty.
When the ratio decreases, it indicates a reduction in economic confidence and a possible increase in risk aversion, factors that can also affect the crypto market.
The influence of China and the Federal Reserve
One of the main factors behind the decline of the copper/gold ratio is China, the largest importer of raw materials worldwide. In September, to support its struggling economy, China announced a series of stimulus measures.
However, despite these initiatives, the copper/gold ratio has not shown signs of recovery. Thus suggesting that Chinese economic growth might not be sufficient to stimulate global confidence.
In parallel, in the United States, the Federal Reserve has reduced interest rates by 50 basis points, a move that usually facilitates the inflow of liquidity into the markets.
However, not even this easing has managed to reverse the downward trend of the ratio. This has led many to wonder if the decline in the copper/gold ratio is a harbinger of deeper economic difficulties.
If risk aversion continues, it is likely that risk assets, including Bitcoin and other cryptocurrencies, will be affected.
Bitcoin, considered by many as an alternative store of value and a speculative asset, is currently up by about 60% since the beginning of the year, with a trading price close to $67,800.
However, the majority of these gains were accumulated in the first quarter of the year. BTC, in fact, has not yet managed to consolidate above the critical threshold of $70,000.
This is attributed to a combination of factors, including the excess supply following the reimbursements to the creditors of the defunct exchange Mt. Gox.
The decline in the copper/gold ratio, which began in May, has fueled fears of risk aversion, culminating in a bear phase that led BTC to drop from $65,000 to $50,000 in August.
Historically, the periods of maximum performance for Bitcoin, such as 2013, 2016-2017, and 2020-2021, have been characterized by a bull trend in the copper/gold ratio, with a more favorable economic climate for high-risk investments.
This correlation suggests that the current decline could represent a drag on the bull expectations for BTC.
The possible scenarios for Bitcoin: supports and resistances
Despite the decline in the copper/gold ratio, investor sentiment towards BTC remains positive.
Recently, the buyers have kept the price above the 20-day exponential moving average, around $66,200. This suggests that there is strong interest in BTC near these levels.
However, to consolidate a bull trend, the buyers will need to overcome a significant resistance at $70,000, followed by the upper threshold of $73,777.
If BTC manages to surpass these levels, it could aim for $72,000, where it would encounter resistance from the bear. Conversely, a downward break could bring the price to $65,000 and subsequently to $60,000.
These levels represent key supports to avoid a more marked correction and maintain the long-term momentum.
The trend of Bitcoin in the medium term will likely be influenced by the combination of economic events and upcoming political developments.
The outcome of the United States presidential elections could bring a significant impact on the cryptocurrency sector, especially if the pro-crypto candidate were to win.
In addition, any further reductions in interest rates by the Fed could facilitate a flow of liquidity into the markets. Thus increasing the interest towards more risky assets.
However, the decline of the copper/gold ratio remains a warning signal for investors.
If the bear trend of this report were to continue, investors might have to scale back their expectations on the rise of BTC, adapting their strategies to a potentially unstable economic context.
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