https://thegoldandoilguy.com/wp-content/uploads/2020/06/13.png 522 850 admin http://www.thegoldandoilguy.com/wp-content/uploads/2014/11/tgaoglogo.png admin2020-06-01 11:57:242020-06-01 11:57:24Comparing Bitcoin to Other Sectors – Risk vs. Value
Quite a few traders have been discussing the recent rally of Bitcoin to recently breach the $10,000 level on May 7, 2020. This psychological price level is a major milestone for Bitcoin – even though the price has fallen into an extended Flag/Pennant formation since reaching the recent peak. Many traders and speculators are expecting Bitcoin to rally alongside the precious metals sector as there appears to be a strong belief that Bitcoin aligns with precious metals well. Our researchers attempted to put this assumption into a simple test and this is what we found. Bitcoin appears to be similarly volatile in comparison to precious metals, although the overall trending of Bitcoin has been moderately lower since the peak levels in February 2020 whereas the Gold/Silver sectors have seen advancing price activity over the same span of time. Precious metals rallied much quicker after the bottom near March 2020 whereas Bitcoin didn’t really begin to rally until late April 2020. Because of this disconnect in price association, we don’t believe Bitcoin is aligned with the precious metals segment. Bitcoin doesn’t seem to be aligned with the price action of the Dow Jones either. Initially, after the peak in February 2020, the price alignment between Bitcoin and the DJI was almost in sync. A broader price disconnect appears to be more evident in late April where Bitcoin rallied and the Dow Jones stayed rather flat. Because of this shift in price alignment – we believe Bitcoin is not aligned with the Dow Jones well enough to derive any cross-market correlation.
BITCOIN – DOW JONES – METALS CHART
Before we continue, be sure to opt-in to our free market trend signals before closing this page, so you don’t miss our next special report!Additionally, we attempted to compare Bitcoin to major consumer sectors (communications, staples, and utilities) to see if we could find any measurable correlation to these sectors in relation to Bitcoin price activity. Again, the early price alignment of all of these seemed somewhat in-sync in the early downside price collapse in February 2020. Yet that alignment quickly deteriorated in early March 2020 as Bitcoin prices collapsed and bottomed while the consumer sectors continued to trend a bit lower until after March 20, 2020. The one thing we did notice is that the consumer sectors appear to be much less volatile than Bitcoin in both downside and upside price activity.