Gold, Bitcoin, USD Combo
I mentioned last week on here on how and why both gold and USD are falling together. Since then, the trend accelerated alongside another detail...Bitcoin making its greatest monthly gain in 3 months. So far this month, both the US dollar index and gold are down by more than 2%. The last time both DXY and XAUUSD fell by more than 2% was in November 2020, the US presidential elections. It was also the month when Bitcoin shot up 41%. What other months saw this strange combo? Sep 2013 (as Fed disappointed expectations of tapering) and Jul 2010 (Ezone received more bailouts). I could site bitcoin's fundamentals, such as Paypal and other institutional adoption in autumn 2020 or spot ETF interest from the big guns as well as Fed pause today. Instead, we focus on the chart and coincident developments until further notice. The emerging argument that Bitcoin is stealing gold's thunder, while USD languishes is currently playing out as it did in summer/autumn 2020. Fundamentally, the set up was different (Fed was in full easing ZIRP mode vs the biggest tightening in +40 years). Yet, this rare USD-GOLD-BTC combo offers another clue for traders next month. We will share the conclusion/strategy with our WBG members before the end of the week.
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