Bitcoin Lags Behind Gold, But Yen’s Decline Hints at Potential Rally

On Oct 21, 2024

Gold and S&P500 have outpaced Bitcoin in record highs, however, market insiders observe key factors that are lining up to push BTC beyond its peak.
The massive Bitcoin liquidation by the German government and the MT Got repayment announcement in the summer are reported to be the headwinds impeding the growth of the BTC price.

Bitcoin (BTC) approaches a crucial resistance level at $70k as it makes a persistent and steady uptrend to sustain an 8% run in the last 30 days. At press time, the asset was trading at $69k after its daily trading volume recorded a staggering surge of 70% to position the Year-To-Date return at 56%.

Meanwhile, Bitcoin trails gold, which is witnessing its best performance since 2010 and trading at an all-time-high price of $2,718. The 23% year-to-date surge of the S&P500 has also positioned it at a record price after rising above $5,870 on Thursday, October 17.

Why BTC Fails to Breach its Record High in Months

Investigating the reason behind the sluggishness in the BTC’s performance, analysts observed that it has been “too far, too fast” since hitting its record high of $73,700.

According to them, this has been influenced by the consistent liquidations triggered by the decision of the German government to liquidate 88% of the 50,000 BTC ($2.2 billion at that time) seized from movie piracy operators like Movie2k.to.

As of the time we reported on this, the wallet belonging to the German government had less than 5000 BTC, excluding the 9,000 BTC, which was later transferred back to reposition. Coupled with this, the trustee for Mt. Gox also announced that it has begun to make repayments to creditors in Bitcoin and Bitcoin Cash (BCH). Expectedly, this forced a mass sell-off and impeded the growth of BTC.

Subjecting the Bitcoin performance to further analysis, analysts observed that the asset’s availability for trade 24/7 makes it more vulnerable to volatility. In the long run, this leads to liquidation and a significant pressure which weighs the asset down below its fair value.

Supporting this thesis with the chart below, analysts pointed out that the deep red coloring indicates the level of Bitcoin distribution recorded within the period under review.

Meanwhile, the dip provided opportunities for “whales and shrimps” to subject the asset to aggressive accumulation over the past months. Confirming this from Santiment data, we observed that the number of wallets holding between 100 BTC and 1,000 BTC from October 10 to October 13 increased by more than 268. At that time, Bitcoin was hovering around the $59k level.

Can Bitcoin Pull a Record Performance

Analysts believe that the asset can still pull a record performance with the reports that Western central banks could make further rate cuts. Coupled with that, US presidential candidate Donald Trump, who has pledged that his administration would support crypto, is leading polls. Amid the backdrop of this, Japan’s inflation has pegged at 2.5% year-over-year, marking the lowest since April. This was after the country’s central bank was rumored that it may refrain from further rate hikes.

Looking into historical monetary decisions and the impact on the crypto market, CNF uncovered that a small rate hike by Japan in early August sent the Bitcoin price plummeting for some days. Our research also shows that Bitcoin has been up by 1000% against the Yen in the past five years compared to other currencies. Based on this, analysts find it plausible to think that the recent inflation news could be a catalyst to propel Bitcoin to its record high.