Key facts:
For the firm, investors are leaning towards traditional safe haven assets.
Bitcoin is 20% below its all-time high.
The price of an ounce of gold reached a new all-time high (ATH). It surpassed the $2,582 barrier in an adverse context for financial markets, including bitcoin (BTC) and cryptocurrencies.
For CryptoQuanta data provider firm on-chainthe market entered a “bearish phase”. This suggests that investors are opting for traditional safe haven assets such as goldinstead of assets considered risky like BTC.
As seen in the chart below, CryptoQuant’s bullish-bearish market indicator (light blue waves) entered a bearish phase on August 27, when the price of the digital currency created by Satoshi Nakamoto was trading above $62,000 (black line).
CryptoQuant’s report also highlights that “as long as the indicator remains in a bearish phase, a significant rebound is not expected and the risks of a further price correction persist.”
As CriptoNoticias already reported, The rise in the price of an ounce of gold occurs in a context of global uncertainty: due to geopolitical tensions driven by a possible military conflict between Iran and Israel and developments in the war between Ukraine and Russia.
In terms of economic matters, the focus is on knowing What will the US Federal Reserve (Fed) do with interest rates?If the expected cut is not announced on Wednesday, rumours of a recession could be revived.
In this regard, the CryptoQuant report highlights that since the end of July, the main US stock indices such as Nasdaq 100, S&P 500 and Dow Jones have fallen. The fall had its negative effect on the price of BTCas shown in the following graph:
The Nasdaq 100 (blue line) has fallen 10% since July 9, while BTC (black line) has dropped 16%. The correlation (pink waves) between the two, however, has increased from -0.85% to 0.39%.
This change suggests that although both are in decline, their movements are synchronized and their relationship is less negative and more positive.
Investors, for their part, were motivated to move their capital towards assets that offer greater stability, even if the returns are lower, such as gold.
In fact, the price of BTC fell at the same time as the metal hit its new ATH, which has caused their correlation to turn negative“It generally indicates a risk-averse environment where investors prefer traditional safe-haven assets like gold over speculative assets like bitcoin,” CryptoQuant explains.
The correlation between BTC and gold price is at one of the lowest levels of the last yeareither.
While gold is at an all-time high, BTC is trading 20% below the $73,400 line. At the time of writing, it is trading at $57,600.
High volatility week for BTC
The price of the digital currency could rise or fall between now and Wednesday, pending the announcements to be made by the Fed.
If the long-awaited interest rate cut is confirmed, it could awaken Investors’ appetite for assets considered risky such as stocks, bitcoin or cryptocurrencies.
However, if the rate cut is larger than expected, the market could see it as a sign that the economy of the world’s leading financial power is in trouble.
In this case, investors will seek refuge in safer assets such as Treasury bonds or gold, which yield less profit, but are not exposed to large market fluctuations.
