Author: Denis Mwirigi
As of press time, many investors are excited and keep their eyes wide open to observe two major investment assets. The two assets, Bitcoin (BTC) and Gold (XAU), have shown signs of another round of all-time highs, as evident from their correlation data.
In the last decade, they have caught the attention of investors as hedges against inflation and other economic uncertainties. Gold has historically been regarded as a haven, while Bitcoin has been labeled its digital equivalent.
With Gold already reaching key resistances, many believe Bitcoin is preparing for a historic breakout. Mistercrypto on X (formerly Twitter) explores the fascinating correlation between the two and what it means for crypto enthusiasts.
When Gold is reaching new ATHs…#Bitcoin tends to follow shortly after. pic.twitter.com/5TaBSTwxYQ
— Mister Crypto (@misterrcrypto) October 20, 2024
Gold’s Steady Surge Amid Global Uncertainty
With its centuries-old reputation as an instrument of storing value, Gold stands tall amid geopolitical and economic turmoil. The metal gearing towards the key $3,000 mark is propelled by inflation fears, rising oil prices, and the Middle East geopolitical tensions.
As the asset of choice whenever people want to protect their wealth from marketplace turbulence, the metal remains the current rally preference of traditional investors. Such investors have made Gold a staple asset in their conservative portfolios and have rushed to acquire more.
Whereas gold’s price action is trending upward slowly and steadily, Bitcoin thrives on volatility and quick price changes. As a result, gold has lower profit and loss margins than BTC. This dichotomy creates a unique situation where both assets blend well for investors trying to diversify their portfolios with mitigated risks.
Bitcoin’s Breakout Potential: Following Gold’s Lead?
Based on current price action, Bitcoin might soon be due for a breakout. Over the past six months, BTC has been consolidating within an extremely compressed range before its recent $66,000 breakout to form a bullish flag similar to that seen in past cycles.
If history is to act as any indicator, Bitcoin has always followed the upward trajectory of Gold with explosive rallies. For instance, 2020, a US election year, saw both assets soar high to new ATHs.
Besides its supply limit of 21 million coins, increasing scarcity has become a major driving force in Bitcoin price surges. As Gold breaks higher highs, analysts expect Bitcoin to follow a similar pattern eventually.
Many analysts, including Michael Saylor (Founder of MicroStrategy), believe that a new ATH above the $72,000 threshold is near. If Bitcoin manages to break through the current resistance levels, it might spark a parabolic rise that will make it one of the most lucrative assets to invest in as the year ends.
The Investment Debate: Bitcoin or Gold?
Choosing one of the two assets or both depends on one’s risk appetite and investment horizons as an investor. While Gold provides stability and long-term value, making it an inflation and economic uncertainty shield, Bitcoin provides very high growth to the more risk-accepting investor. Its volatility allows exponential gains but with steep corrections as well.
So far, both assets are promising and exciting to watch as the historic U.S. election factor kicks in amid ongoing global market turmoil. The correlation between them points to Bitcoin as the subsequent asset waiting to shine if Gold takes the lead.