Bitcoin is holding above $19,300, while Ethereum is trading above $1,340. According to analysts at Bank of America, Bitcoin can serve as a 'safe haven' during a recession and encourage investors with limited supply. A global economic slowdown seems almost inevitable in view of the deepening crisis in China, as well as high inflation and hawkish central banks in major Western economies:
- According to an analysis by Bank of America, Bitcoin's correlation with gold confirms that investors are beginning to see it as a safer 'store of value'. In early October, the BTC/gold correlation reached its highest level in a year. At the same time, the correlation with US indices has been successively weakening since September 13. 'Safe haven' assets are those that are negatively correlated with the state of the global economy and can gain in circumstances of recession or crises;
- ARK Invest fund manager Cathie Wood conveyed that she has not sold BTC purchased at $250 to date, and described the Grayscale Bitcoin Trust's shares as an investment opportunity given that regulators will ultimately take a softer approach to regulating cryptocurrencies;
- Bitcoin's Average True Range (ATR) i.e. overall price volatility, lost 76% over the year is today at levels last seen in November 2020, just before the sharp upward bounce. The BTC price has also returned to November 2020 levels. BTC's volatility continues to dry up against the S&P500 and NASDAQ, for which ATR has risen 64% and 19%, respectively, over the same time frame. Neutral momentum, ready to shoot in either direction, is also indicated by the RSI near 45 points.
- It seems that the correlation with gold is likely to be temporary and Bitcoin will eventually face a sharp move in either direction, which will confirm that the digital asset is still a high-risk instrument. At the same time, however, the major cryptocurrency may gain in 2023 despite the recessionary environment because of the cyclical nature of the increases roughly a year before halving. This would mean a return of bullishness around winter/spring next year.
According to Bitcoin mining difficulty models, the new cost base for Bitcoin miners is the $19,300 level, meaning that mining Bitcoins worth less than $19,300 means losses and no profitability for them. A sharp drop below these levels could result in the capitulation of the miners, whose reserves at risk of liquidation currently stand at around 78,000 BTC, according to a Glassnode report. Source: Glassnode
Bitcoin, H4 interval. Bitcoin shows a strong correlation with gold prices, the cryptocurrency's volatility remains limited. The SMA50 (black) and SMA200 (red) averages are moving sideways, maintaining the gap that separates Bitcoin from both the 'golden cross' and the 'death cross'. It seems that the intersection of both averages will herald a sharp movement in either direction. If the SMA50 crosses the SMA200 from below, we can expect increases - such a situation we saw in the second part of July. If vice versa - the downward movement may accelerate to $13,000. Source: xStation5
