Bitcoin and gold soaring - Long-term flight to quality?

Thought of the week

Bitcoin’s new high for the year and gold’s all-time high could be harbingers of “difficult” months ahead on the global markets if they cool down significantly towards January and do not get off to a good start in the new year 2024. An early “flight to safety” by institutional investors could therefore lead to contrary developments in the various asset classes in the coming months.

Digital Asset News

The price of bitcoin has risen along with the price of gold. The precious metal has reached a new all-time high and could indicate a flight to safety. The price of gold has reached a new all-time high and climbed above the important USD 2,100 mark on 4 December. Meanwhile, Bitcoin rose to over USD 41,000 for the first time in 19 months.

The possible approval of a Bitcoin spot ETF in the United States is also boosting optimistic forecasts.

13 providers, including industry giants such as BlackRock and Grayscale, are awaiting a decision from the US Securities and Exchange Commission (SEC).

ETF analysts at Bloomberg believe it is very likely that all applications will be approved at once by 10 January. This would mark the beginning of a new era of institutional investment in Bitcoin and could also give the price a strong boost.

“It is very likely that we are on the verge of a Bitcoin spot ETF,” Bitcoin analyst Willy Woo commented on X on the new highs in the price of gold. “The first commodity ETF was SPDR Gold Trust. It offered investors an easy way to add gold to their portfolio.”

Woo added: “After its launch, gold had an 8-year rally between 2005 and 2012, with not a single year of decline.”

Although cryptocurrency adoption has stalled following implosions in the industry over the past year, the CEO of trading platform eToro is convinced that the appeal of exchange-traded funds (ETFs) to institutions and the ease of investing across multiple platforms for non-experts will continue to drive adoption of Bitcoin.
EToro CEO Yoni Assia explained in an interview with Cointelegraph at Abu Dhabi Finance Week that institutions tend to have rigid systems and prefer not to build new infrastructure for each asset class. However, in his opinion, products such as Bitcoin ETFs fit into their existing ways of working and make it easier for them to enter the market without having to develop new frameworks for them. He added: “[Bitcoin] ETFs could be a significant driver of adoption [because] institutions operate in a very rigid way. […] They’re looking for the same infrastructure, and ETF in many cases is that infrastructure to enable institutional demand for those who don’t want to custody themselves.” Assia added that the availability of a Bitcoin ETF would likely bolster Bitcoin’s legitimacy in the eyes of institutional investors, and in turn could support the cryptocurrency’s price, as it represents a familiar and institutionalised form of investment as an ETF.

Binance’s $4.3bn settlement with the US Department of Justice (DOJ) is being hailed as a positive step for the company and the crypto industry as a whole, according to Galaxy Digital’s Mike Novogratz.

In an interview with Bloomberg on 29 November, the crypto investment firm’s CEO expressed his belief that the high-profile settlement should reassure worried investors and users of the global crypto exchange alike: “I think it [the platform] has become less risky in a lot of ways. People were worried about using Binance. Now there’s a lot less to worry about.”

Novogratz also commented on the thoughts of major investment firms involved with crypto exchanges, as well as traditional financial institutions (TradFi), as regulation of the crypto industry is still a hot topic in the US.

Binance not comparable to FTX. Galaxy Digital’s CEO explained that a sensible approach flanked by investment and relationships with companies that “take their work seriously” remains crucial, while reminding that the mainstream financial industry has also repeatedly found itself on the wrong side of regulators in recent years. Overall, the general trend of the market is a very positive one!

Digital Asset Market

From a chart perspective, Bitcoin is now at a new high for the year and is on the cusp of breaking through any resistance zones. In this phase of the last few days, however, hardly any significant support zones have been formed. In the coming days, it is now a matter of finding / establishing new resistance zones in order to start a consolidation in which, on the one hand, support zones for possible next rises can be formed / found and, on the other hand, to bring a strong positivity into these via capital shifts from Bitcoin to altcoins. Should there be strong sell-offs and corrections, Bitcoin should form a strong support zone around $40,000 – $38,500.

The next price targets in the event of a positive trend: ~$42,500, ~$44,300, ~$45,500

The next price targets in the event of a negative trend: ~$40,000, ~$38,500 ~$37,700

Bitcoin currently offers no opportunities for risk-optimised entries – this train has unfortunately left the station. Altcoins, on the other hand, which are lagging a little behind in terms of performance and serve popular subcategories (AI, gaming, etc.) could still be lucrative opportunities for entry in the coming days if the positive trend continues.

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