Bitcoin Faces Challenges as Gold Shines with Strong Gains

Bitcoin struggles as gold posts a nearly 5% weekly gain. The correlation between the two assets is being examined amidst changing macroeconomic conditions. Traders predict short-term dips as Bitcoin hovers around $95,000, close to key support levels. Technical data suggests mixed signals for BTC, with upcoming Federal Reserve decisions looming.

Bitcoin (BTC) is experiencing a tough moment, with prices struggling and all eyes on gold, which is making a notable comeback with a 5% gain this week. The correlation between Bitcoin and gold is being closely examined amid shifting macroeconomic conditions. Traders are speculating on a short-term drop, even as a wider BTC price increase seems imminent.

As of May 6, just before Wall Street’s opening, Bitcoin was aiming for fresh monthly lows, pointing to a rather indecisive crypto market that simply contrasts with the gold surge. Data from Cointelegraph Markets Pro and TradingView show that BTC is losing traction, hovering around $95,000 right before the daily close.

BTC’s trajectory is inching dangerously close to the significant yearly support level of $93,500. Meanwhile, gold, or XAU/USD, managed a solid 1.5% climb on the same day, with a total week-to-date gain of 4.4%. Trading firm QCP Capital expressed concerns in their Telegram bulletin regarding the state of crypto volatility, noting that current crypto implied volatility is still quite low. They also observed that dollar weakness has been driving up emerging market currencies, particularly the Taiwanese dollar, alongside gold prices.

QCP remarked that the recent currency fluctuations coincided with a nearly 3% spike in gold, as investors appear to be leaning towards the weaker-dollar narrative, factoring in some geopolitical risks, including possible US trade diplomacy shifts. Despite all of this, Bitcoin is seemingly lagging behind gold’s path. QCP hinted at a potential turning point for Bitcoin, suggesting that it could either separate from gold’s appeal or reconnect with broader risk assets.

On a different note, The Kobeissi Letter pointed out that the correlation between gold and Bitcoin has been strengthening recently. They noted that in April, Bitcoin had rallied alongside gold, with Bitcoin’s value rising by 12% closely trailing gold’s impressive surge of 15% over the same period. Their commentary emphasises the ongoing demand for decentralised and inflation-resistant assets.

Traders are also looking at some technical data, suggesting that Bitcoin (BTC/USD) is experiencing a momentary pause in a more extensive recovery pattern. For technical insights, the moving average convergence/divergence (MACD) is showing mixed signals regarding price trends on both long and short timeframes. For instance, notable trader Dave the Wave pointed out that the weekly MACD is nearing a bullish crossover, indicating some strength. Yet, at the same time, a bearish crossing on the daily MACD might suggest slowing market momentum.

Fellow trader Titan of Crypto highlighted the significance of upcoming macro events—specifically the Federal Reserve meeting set for May 7. As for price predictions, Keith Alan, co-founder of Material Indicators, cautioned that he doubts the yearly open will hold steadfast. He expressed that he’d be surprised if it did and prepared for possible wicks down to the $88,000-$90,000 range, identifying $91,600 to be a probable target for the week.

It’s important to note that this article does not provide investment advice. As always, investment carries inherent risks, and it is absolutely advisable for readers to do their own research prior to making financial decisions.