Bitcoin Decouples from Gold and Bearish Sentiment Remains
- Regarding valuation metrics, Bitcoin price remains in a BEARISH phase.
1. CryptoQuant’s Bull-Bear Market Cycle Indicator has been in a BEARISH phase since August 27, when#Bitcoinprice was trading at $62,000. No significant rally is expected as long as the indicator remains in a BEARISH phase.
2. The MVRV ratio has been trading below its 365-day moving average since August 26. A drop below the 365-day moving average also indicates a risk of a new correction in prices. This was also the case in May 2021, when Bitcoin lost 36% in two months, and in November 2021, when the last bear market began.
3. There are also signs of decline in Bitcoin long-term holders (LTH) spending at lower profit margins. LTH SOPR bands (moving averages of varying lengths) have been trending down since late July. The fact that LTHs are spending at lower margins is evidence of a lack of new demand for Bitcoin.
- Bitcoin has decoupled from #gold. Bitcoin prices fell at the same time that gold prices reached a new record high, causing their correlation to turn negative. A period when the correlation between Bitcoin and gold is negative, with gold rising and Bitcoin falling, typically indicates a risk-averse environment where investors are looking to traditional safe haven assets like gold. In turn, Bitcoin has followed the stock market down.