Gold is stealing the spotlight from Bitcoin

What has been happening in recent days in the financial markets is sensational: gold is stealing the spotlight from Bitcoin. 

Generally, the exact opposite happens, with the volatility of the BTC price far exceeding that of an ounce of gold, but this time it is the price of the yellow metal that is attracting attention. 

It is even possible that the gold ETF market is draining capital from that of Bitcoin. 

The Gold Record

Today, the price of gold has reached a new all-time high, nearing for the first time in its history $4,800 per ounce. 

The curious thing is that just seven days ago it had never exceeded $4,000.

It has practically risen by 7% since the beginning of October, and even by 24% since the second half of August. 

Although these are very small percentages compared to the norm of Bitcoin, for gold they are actual records. 

Just consider that $3,500 per ounce was surpassed for the first time in history only last month, and that the great bull run of gold started at the end of 2023 from about $1,800 per ounce. 

The $2,000 mark was surpassed for the first time in November 2023, while the $3,000 mark was reached in March of this year. 

In other words, in about two years it gained 111%, a stratospheric percentage for gold’s habits. 

Bitcoin suffers

Bitcoin instead has returned to slight suffering. 

After Friday’s crash, which for a brief moment brought it well below $110,000, yesterday it had recovered to $115,000, only to drop back down today to $111,000. Now it has slightly risen to $112,000, but it’s unlikely to stay there for long. 

However, the main issue seems to be the strength of the dollar, with the Dollar Index rising today to 99.4 points. 

In fact, last Thursday the DXY had also risen to 99.5 points, and indeed the following day the mini-mini-bubble of BTC that had started to inflate on the first of October could no longer hold. 

Yesterday, the Dollar Index had fallen below 99 points, allowing a timid rebound of Bitcoin, but today as it rises again, it has pushed BTC back down. 

Note that this dynamic has actually been in place for ten days, namely a Dollar Index that continues to rise. Bitcoin had tried to hold on, so much so that on October 6 it recorded new all-time highs despite the rise of DXY having already slightly begun. 

The problem is that since October 7, the rise of the Dollar Index has accelerated, causing the upward movement of BTC to end, and eventually triggering the correction. 

This correction theoretically should still be underway, also because there seems to be the possibility that the price of Bitcoin could end up falling well below $110,000 again.

The Role of Gold

To be honest, starting from the first of October, a mini-mini-bubble began to inflate on the price of Bitcoin, which theoretically could have also inflated and perhaps transformed first into a real mini-bubble, and then even into a large bubble, like the one at the end of 2017. 

However, none of this happened. 

It should be noted that when a bubble inflates on the price of Bitcoin, there is no correlation that holds until the bubble bursts. This time, however, it was different. 

Not only was the mini-mini-bubble already evident even before it turned into a real mini-bubble, but in the almost total absence of FOMO, it was indeed possible to imagine that it would end up bursting soon. 

To all this was added the new gold rally, which started particularly on Monday, October 6th. 

In fact, on October 7, when the Bitcoin mini-rally at the beginning of the month ended, the gold rally could have stopped as well, but it continued. In fact, yesterday it accelerated, so much so that the price of gold has been rising abnormally for more than a week now. 

All this might have temporarily drained capital from the Bitcoin market. 

The Mini Gold Bubble

At this point, however, there are signals indicating that a mini speculative bubble might have inflated on the price of gold. 

Everything seems to have started after surpassing $4,000, because on October 9th the price appeared to have begun a slight decline, which, however, had already ended the following day. 

Just on Friday the 10th, while the crypto markets were experiencing a crash, a mini speculative bubble seemed to be inflating on the price of gold, with its price seemingly destined to return to $3,900 per ounce, but instead it began to rise towards $4,100.

Now, in fact, the hypothesis of a possible correction of gold is starting to circulate, perhaps next week, which could also be interpreted, should it actually occur, as the bursting of the current mini-bubble. 

Generally, mini-bubbles last a short time (one or two weeks), and when they burst, they simply bring prices back to where they started. As for the current possible mini-bubble on gold, it started from around $3,950. 

In the event that this mini-bubble in the gold price actually bursts, the capital exiting this market could also flow back into Bitcoin.