The last two months were supposed to be a turning point in the view of the vast majority of players in various markets. The crisis in all its manifestations should have gone into decline, and the Fed's policy should have softened. Such were the expectations of autumn in July and early August.
Bitcoin leaves the fund and goes to gold
However, the situation turned out to be the opposite due to the low effectiveness of the fight against inflation. As a result, the Fed's aggressive monetary policy has been maintained, and interest rate cuts are not expected until 2023 at the earliest.
At the same time, the vast majority of financial market participants are confident that a recession in the US economy will occur in the next 8–12 months. This means that the situation has not returned to normal for at least a year. Therefore, investors begin to look for assets to preserve capital.
Low trading activity and the fall in Bitcoin's volatility to local lows provoked increased attention to cryptocurrency as a store of value. The growing correlation with gold confirms the reorientation of investors' positions in relation to BTC.
Bank of America experts also believe that the growing correlation between the precious metal and Bitcoin indicates a willingness to use the digital asset as a "safe haven." At the same time, the correlation of Bitcoin with stock indices gradually weakened, which was reflected in the BTC/USD price charts.
BTC/USD analysis
As of October 25, the main cryptocurrency is trading in the usual range of $18.6k–$19.8k. Trading volumes continue to decline, due to which the "triangle" figure is gradually coming to an end. In the near term, there is every reason to expect the Bitcoin price to go beyond the current range.
Technical indicators on the daily chart point to the continued flat trend, which is not surprising in the face of falling trading volumes. Considering that the asset has been trading within a narrow range for more than a month, we can assume an upward breakout of the resistance level, after which the local bottom will be updated.
This scenario would seem most obvious if Bitcoin continued to maintain a correlation with stock indices. According to JPMorgan analysts, the stock market is at the peak of the current season.
Analysts attribute this to the historical context of October, as well as the "mid-term elections" factor, due to which trade has significantly revived. At the same time, the co-dependence of BTC and stock assets is weakening, which casts doubt on a similar upward movement in the cryptocurrency.
Gold analysis
This means that from now on, in order to analyze the further movement of the price of Bitcoin, it is necessary to take into account the state of gold. The precious metal is in a downward trend and has hit a 2020 low. At the same time, there is reason to believe that the precious metal has completed its downward movement.
On the daily chart, we see the formation of a "double bottom" pattern, as well as a "bullish engulfing" pattern. Two bullish signals may indicate a gradual price reversal. The MACD indicator completes the formation of a bullish crossover, which indicates a strong bullish trend.
Results
The situation in the cryptocurrency market and related sectors has stabilized due to a combination of fundamental and local factors. Thanks to this, we see the growth of the stock market and the prerequisites for the growth of precious metals. Given this, the probability of an upward breakdown of the "triangle" of Bitcoin increases. In this case, the targets will be the $23k–$24k levels.
However, given the huge volumes of liquidity below the local bottom, an upward impulse cannot be ruled out, turning into a steep bearish peak. In the current liquidity situation, updating the local bottom is a necessary evil for a full-fledged start of an upward trend.
