Gold experienced its steepest decline in years, plummeting over 5%, which ignited a surge in Bitcoin and lifted the entire crypto market.
Summary
- The crypto market is gaining momentum with Bitcoin approaching $114,000
- Gold fell over 5% intraday, likely due to market overextension
- Sentiment within the crypto market may be shifting towards neutral
As gold tanks, Bitcoin witnesses a rally, showcasing a remarkable shift from traditional safe-haven behaviors. Bitcoin surged sharply on Tuesday, October 21, reaching a daily high of $113,996.35, while gold was poised for its largest daily drop in five years.
This uptick occurs as crypto market sentiment remains at one of its lowest points in months, with Bitcoin (BTC) facing challenges to exceed the $110,000 mark. This rally also aligns with a slight uptick in overall market sentiment.
Simultaneously, gold has retreated from its Monday record high of $4,381 per ounce, dropping 5.5% to a weekly low of $4,115.26. This correction, expected to be its worst day since 2020, likely stems from traders’ overly extended long positions.
Why is crypto up today?
Several analysts suggest that the primary cause of the gold decline was extreme overbought conditions in the market. Gold prices had surged 25% over the past two months due to significant shifts in macroeconomic climates. Specifically, new tariffs against China impacted both crypto and stock markets, while gold experienced a rise.
“The mere fact that we have rallied $1,000 in six weeks . . . it is indicative that prices are overly elevated, we are in the stratosphere,” commented Nicky Shiels, analyst at MKS Pamp.
The rise in gold prices has made Bitcoin appear less attractive as a safe-haven investment. With the latest drop in gold, alternative asset investors may return to Bitcoin, potentially boosting the overall crypto markets.
