Bitcoin price rally at risk as gold and US dollar show signs of recovery

Dan Tapiero, the co-founder of 10T Holdings, said weak hands have been shaken out in the gold market. This raises the probability of a gold rally in the near term, especially as it comes off of an 80-day pullback period.

A rally in gold and the dollar may dampen Bitcoin price

Bitcoin has seen strong momentum in the past three months, as it achieved an all-time high on Coinbase and a number of other major exchanges.

Despite this, the threat of a correction for Bitcoin is a real possibility if gold begins to rebound in tandem with the U.S. dollar.

Largest three-week outflows from gold. Source: Dan Tapiero, BofA

According to Tapiero, the largest ever three-week liquidation in the gold market increases the probability of an uptrend. He wrote:

“Very bullish for #gold. Largest EVER 3 wk liquidation just occurred. Weak hands cleaned out. $25 bil went into EM equity, much more into US equity. Only $8 bil out of gold. Maybe tiny amount into #bitcoin. #BTC not yet big enough to be a macro asset class…but coming soon.”

Some might consider the recovery of gold a positive factor for Bitcoin in the medium term. Since more investors are starting to acknowledge BTC as a store of value, the uptrend of gold could benefit the cryptocurrency.

Still, there is a stronger case to be made that the rally of Bitcoin coincided with large gold outflows, as Cointelegraph reported. That means a major gold rally could impact the near-term momentum of BTC.

The parabolic uptrend of U.S. stocks is another factor

The U.S. stock market is continuing to rally due to unprecedented liquidity from the central bank. The combination of average inflation and relaxed financial conditions have been pushing stocks to all-time highs.

As a result, Jan Nieuwenhuijs, an independent financial researcher at The Gold Observer, reported that U.S. stocks had their best month since 1987.

There is a…

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