Bitcoins posted double-digit gains in October, outperforming gold for the first time since June.
The world's biggest cryptocurrency in terms of market value ended last month with a gain of 10.26%, interrupting a series of losses of three months, according to data from Bitstamp.
At the same time, gold gained only 2.74% in October, after falling by 3.17% in September – the biggest monthly decline since June 2018.
Bitcoin posted gains for five consecutive months from February to June – its longest winning streak since August 2017.
Gold, however, posted losses in February, March and April. The yellow metal rose 1.7 and 7.9% in May and June, respectively, although gains were minimal compared to 62% and 25.89% of Bitcoin in the same months.
While BTC had outperformed gold over the five months ending in June, the trend reversed in favor of the yellow metal in the third quarter.
Bitcoin fell by 6, 4 and 13.5% in July, August and September, respectively. Experts have associated the sale with fears of Facebook's accelerated regulation Libra on crypto-currencies in general, technical overbought conditions and other factors.
Gold gained 0.23% and 7.65% in July and August, respectively, as the markets anticipate strong monetary easing from the US Federal Reserve and other major central banks in the face of a sharp easing. escalating the relationship between China and the United States. trade tensions.
Metal fell 3.17% in September, but this decline was limited compared to the double-digit sale of BTC.
In the future, gold may underperform bitcoin in November, with optimism on the South American trading front may reduce demand for safe haven for metal.
In addition, on October 31, the Fed announced that it would suspend rate cuts in order to evaluate incoming data before considering further reducing borrowing costs, in part because of potential mitigation of trade tensions, according to the New York Times. Gold, a zero-yielding asset, generally supports the Fed's accommodative policy and faces sell-off pressure when the central bank signals a pause or a rate hike.
Meanwhile, seasonality is positive for Bitcoin – cryptocurrency has gained in November in six of the last eight years. More importantly, according to historical data, BTC tends to get a strong offer six months before halving the mining reward. The next halving event is scheduled for May 2020.
In addition, the current US stock rally may bode well for Bitcoin. "The past increases in Bitcoin have been characterized by a gradual decline in stock market volatility. For example, we noted its inverse relationship, even imperfect, with the longer term VIX index (that is, 2017), Delphi Digital analysts wrote in their monthly report.
The S & P 500 index hit a record $ 3,066 on Friday and the bull market is expected to remain on the backs of three big buyers: corporations, foreign investors and US households, according to Goldman Sachs.
Bitcoin's technical graphics are also biased, as seen below.
Daily and three-day charts
BTC is currently changing hands at $ 9,170 on Bitstamp.
Prices jumped 28% in the three days to October 27 (top left) as trading volumes reached their highest level since February 2018.
In addition, the recent decline from $ 10,350 to $ 9,000 was accompanied by lower volumes. Low volume shrinkage is often short-lived. The 200-day AM has restrictive drawbacks since October 30 (top left).
Overall, the path of least resistance appears to be the highest and prices should revisit the resistance at $ 9,600 and $ 10,000.
The bullish case would weaken if the 200-day MA was set at $ 9,106. This would validate the bearish position put forward by the 5-month AD downward to $ 9,268 (top right) and would likely lead to a significant drop to $ 8,500.
It should be noted that BTC has not managed to repeatedly maintain its earnings above the MA at 5 months over the weekend. Bulls need to progress quickly.
Disclosure: The author does not hold any cryptocurrency assets at the time of writing.
Bitcoin image via Shutterstock; charts by Trading View