Despite various significant catalysts, Bitcoin’s value has declined from its peak, nearing essential support levels.
Summary
- Bitcoin’s value is dropping even with unprecedented ETF inflows and increased adoption
- Stocks and gold are performing noticeably better than BTC this week
- Nevertheless, waning confidence in the dollar may positively impact Bitcoin and gold
The price of Bitcoin is decelerating despite achieving record ETF inflows, treasury accumulation, and broader adoption. After hitting an all-time high of $126,198, Bitcoin fell below its critical support level of $120,000 on October 9. Analysts are divided in their opinions, with some interpreting this as a temporary setback, while others attribute it to fundamental factors.
Ruslan Lienkha, chief of markets at YouHodler, suggests that the equity markets are effectively siphoning off capital from cryptocurrency assets. Investors are notably hesitant to invest in high-risk assets while stock prices are elevated. However, this positive sentiment is chiefly fueled by the anticipation of loosening monetary policy, rather than actual economic expansion.
“Such one-sided optimism often precedes a correction phase. If U.S. equities were to experience a meaningful pullback, it could easily trigger a risk-off environment across other asset classes. In such a scenario, leveraged crypto positions could be unwound quickly, leading to deeper drawdowns,” explained Ruslan Lienkha from YouHodler.
Falling dollar confidence could elevate Bitcoin’s value
However, the prospect of reduced interest rates, along with the relative fragility of the U.S. economy and ongoing political instability, is already creating ripple effects in various sectors. For instance, gold posted one of its strongest weeks recently, surpassing the $4,000 mark on October 8.
Nic Puckrin, an investment analyst and co-founder of The Coin Bureau, warns that the current surge in gold prices is primarily driven by momentum and might dissipate. Traders may soon begin to consider alternative options, including Bitcoin (BTC).
“After a more than 50% increase in the gold price year-to-date, focus may now shift to other alternatives,” remarked Nic Puckrin of The Coin Bureau. “These could encompass other metals and commodities, tokenized real assets, and Bitcoin, which is still seen as undervalued compared to gold.”
