Bitcoin emerges as the king of assets, 10X growth over gold during US banking crisis
Despite the volatile price action of Bitcoin (BTC), the world’s largest cryptocurrency has outperformed all other assets, including gold. Although trading below its psychological milestone of $30,000 to $29,000, Bitcoin is expected to grow further in 2023 as it acts as a safe haven for investors amid the US banking crisis.
Bitcoin reigns as the best asset
Capriole Investment, which provides research and analysis of cryptocurrencies, has reported that the current market cycle favors it hard assets such as gold, as indicated by the 200-week gold-to-equity ratio. This classic indicator highlights when the market favors safe haven assets like gold over riskier equity assets. Both gold and Bitcoin have generated some of their best returns during these phases.
As the market continues to favor hard assets, Bitcoin has emerged as the preferred safe haven for wealth amid the US banking crisis and fiat currency weakness. During this period of high correlation, Bitcoin has outperformed gold by 10X in 2023, making it the year’s best asset among the major asset classes.
The strong positive correlation between Bitcoin and gold has also increased significantly, making them attractive options for investors looking to diversify their portfolios and hedge against economic uncertainty. With unsustainable austerity, banking crises and de-dollarization looming, the market is turning to these safe havens to protect wealth.
According to the Capriole Investment report, the current Bitcoin rally in 2023 is believed to be organic and spot driven. The report highlights a key metric that shows total futures open interest as a ratio to the total market capitalization of Bitcoin and USDT.
This metric provides insight into market influence and shows that crypto market influence peaked with the FTX scam in November 2022. Since then, this ratio has been on a one-way downward trend, despite Bitcoin’s price rising by over 80% from $16,000 to $30,000. This suggests that there has been little speculation in the market this year.
The report suggests that until this ratio increases or Bitcoin dominance peaks, the basis for sustainable price appreciation remains in place. This means that the current rally is driven by organic demand rather than speculation, which is a positive sign for the long-term growth of the cryptocurrency market.
Furthermore, the report suggests that the decline in leverage indicates a healthy market that is less vulnerable to sudden price drops. This is because a high level of leverage can often lead to instability in the market, causing sharp price swings and potentially resulting in a market crash.
BTC’s $30-32K Dilemma
According to the report, Bitcoin is trading within the biggest technical resistance block on the chart since $20,000. This region, which ranges from $30,000 to $32,000, represents the bottom of the 2021 range and the breakdown point of the bear market that began in 2022.
In addition, there is a large weekly order block level and Fibonacci extension level from the previous cycle. $30,000 is also a big round number level, representing a 50% increase from the 2017 cycle all-time high of $20,000, and $32,000 marks a 100% appreciation in Bitcoin since the FTX fraud bottom of $16,000.
While Bitcoin has shown remarkable resilience in recent months, it is important to note that past performance is not an indicator of future performance. However, according to Capriole’s report, if Bitcoin manages to close above $32,000 weekly, it would not be surprising to see a new trend carry the price to $40,000.
Featured image from Unsplash, chart from TradingView.com
