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The close correlation between Bitcoin and the price of gold
The close correlation between Bitcoin and the price of gold
Trading

The close correlation between Bitcoin and the price of gold

By Federico Izzi - 9 Jan 2020

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As occurred in recent days, it is Bitcoin to give a negative signal, a bearish signal that drags the rest of the market. The correlation between Bitcoin and the movements of gold continues to be curious. 

Today more than 80% of cryptocurrencies are in negative territory with average declines of around 5%. 

coin360 20200109
Source: COIN360.com

Contrary to what happened in the last few days, when the geopolitical news arrived, the easing of the tensions between the US and Iran sees Bitcoin retreat and return to Tuesday’s levels, with a decrease of 6% from the highs reached after the Iranian missiles launch. In these hours there is a bearish movement in line with the gold retracement rates. 

From last night’s highs, Bitcoin lost 6%, while gold fell by 4.5%, confirming a high correlation in price trends, a condition that has rarely occurred more than once in recent years.

ETC 20200109

Staying in the cryptocurrency sphere, among the few positive signs of today emerges Lisk (LSK) which is the best performing asset of the day with an increase of 15%. Ethereum Classic (ETC) also does well and manages to rise by 2.5%. Waiting for the next hard fork scheduled for January 12th, the movement attracts ETC’ buyers. 

Monero (XMR) also continues to do well, with a 2% increase. Monero, with today’s rise, turns out to be the best performance among the top 50 cryptocurrencies on a weekly basis, scoring a +25%.

The capitalization, after reaching yesterday’s highs above $210 billion, which had not been recorded since mid-November 2019, today falls just below that level. Despite today’s decline of Bitcoin, which goes beyond -5% at some points of the day, the dominance remains anchored at 69%. Ethereum’s dominance remains unchanged at 7.2%, as does Ripple’s at 5.2%.

BTC 20200109
Bitcoin chart by Tradingview

Bitcoin (BTC) 

For the umpteenth time in the last seven months, Bitcoin tests the first dynamic downward trendline without a positive outcome, which actually affects again the rise and rejects the Bitcoin prices under the $7,900 threshold in the last few hours, after having touched $8,500 yesterday. 

It is a decline that at the moment does not affect the bullish structure which Bitcoin has outlined since the relative low of January 3rd in the $6,300 area, but it is necessary in the next few hours to return to support the rise above the $7,600-7,700 threshold. A return below this level would invalidate the ongoing bullish structure.

ETH 20200109
Ethereum chart by Tradingview

Ethereum (ETH) price

Even Ethereum in the last few hours, after having touched $148, the highest level since last December 10th, finds the prevalence of profit-taking that brings the prices to the $137 area. For Ethereum the technical structure is similar to that of Bitcoin, with the need to find a consolidation above $134 in the next few days to set a new extension that would be confirmed with prices over $150.

Ethereum would invalidate the current bullish structure, which started with the December period lows, if prices returned below $132-130. It is necessary for ETH to give a decisive second bullish signal after the first one arrived last Monday with the breaking of the dynamic bearish trendline that affected the trend for over six months.

 

Federico Izzi
Federico Izzi

Financial analyst and independent #trader – S.I.A.T. & Assob.it partner. He operates actively on stock and derivatives markets (futures and options) since 1997. A precursor of cyclic-volumetric analysis he is known for having identified the most important upward and downward movements in the financial markets of recent years. He participates annually as a speaker at the ITForum in Rimini since the 2010 edition and InvestingRoma and Napoli since the first edition of 2015. He is a guest and market expert on the "Trading Room" and "Market Driver" broadcasts of Class CNBC, Borsa Diretta.tv and on the evening news of Traderlink. Since July 2017 he is a permanent guest on LeFonti.TV, the only weekly national space dedicated to cryptocurrencies alongside the most important international experts in the field. He was interviewed as a cryptocurrency expert for Forbes Italia, Panorama, StartupItalia and DonnaModerna. He was recognized as the first Italian technical analyst to have published the first secular cyclic analysis on Bitcoin. Periodically publishes articles on ITForum News, Sole24Ore, MILANOFINANZA, TrendOnLine and Wall Street Italy. Federico Izzi is... "Zio Romolo".

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