The long-term price trend of Bitcoin (BTC) against gold is showing a bullish reversal after retracing to the levels previously seen in 2017, 2022 and 2023. A potential trend reversal comes along with what analysts describe as “opportunity within risk.”
The BTC-gold ratio shows a high divergence
MN Capital founder Michael van de Poppe noted that the Bitcoin-to-gold ratio is showing strength after forming a high divergence with the relative strength index (RSI) on the daily chart.
A bullish divergence occurs when the price makes a low while momentum indicators such as the RSI make a low. The setup indicates that selling pressure is easing.
In February, the ratio recovered to a key support level near 12-13, which previously acted as resistance in 2017 before becoming support in 2022 and 2023. As a result, the current level can serve as a potential long-term trend of Bitcoin against gold.
Another reason for this possibility is the volatility of Bitcoin and the turnover of gold exchange-traded funds (ETFs) over the past month.
For example, the gold-backed ETF SPDR Gold Shares (GLD) recorded $3 billion in outflows on March 6. In Letter Kobeissi it is stated,
“This is +200% higher than any previous large daily breakout seen over the past 2 years.”
Meanwhile, the 30-day change in Bitcoin ETF turnover improved to $906 million in net income on March 11, up from $1.9 billion in the month.
related to: Bitcoin Covers $70K Range As March Fed Rate Cut Chances Less Than 1%
Amounts measured in domestic units show a different difference. The 30-day change in Bitcoin ETF balances improved from -34,197 BTC to 12,909 BTC, while the ETF’s gold holdings fell from 1.4 million ounces to around 606,850 ounces on February 13.
Macro for Bitcoin creates a window of opportunity
According to Binance Research, the current macro volatility may present an “opportunity within the risk” for Bitcoin. The report noted that BTC moved into macro fuel assets such as oil and US stocks during the US-Israel-Iran war, reflecting how global events are currently driving price impact.
But capital is returning to BTC despite the volatility. Bitcoin’s share of trading volume in US spot ETFs has increased recently, indicating increased institutional activity.
Related: Three Binance Bitcoin Charts Show Setup Behind Next Big Move
However, ETFs still account for only about 9% of total BTC spot trading volume, well below the 30-40% of ETF trading volume in the US stock markets, allowing for institutional expansion.
Historically, periods of geopolitical turmoil have also preceded strong recoveries. For example, US midterm election years often produce market declines, with the S&P 500 averaging 16% from peak to trough. While Bitcoin has historically fallen by around 56% during these periods.
However, the 12 months following a midterm election have never produced a negative return for the S&P 500 since 1939, which has averaged a 19% return, and Bitcoin has risen an average of 54% in each of the three post-midterm years.
As reported by Cointelegraph, the $78,000 level is now key to a possible reversal of the broader trend in the BTC market.
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