When the third halving took place on May 11, 2020, the relationship between Bitcoin and gold was highlighted. Today is the 12th day since Bitcoin reached a new ATH. Bitcoin and Gold are unrelated today, according to analysts.
The reversal in this correlation is incredible, but there is a historical precedent here as well. After all, this is similar to the case in November 2020 when Bitcoin broke up with Gold after a consistently high correlation for more than 3 months. Before the third halving, the correlation was above 27%. However, the one-month correlation has declined to just 4.5% since then. Despite repeated attempts to try a new ATH, in the short term, the price was constrained by BTC trading at $ 37,200.
Change in Investment Flows
Despite Ethereum’s gains of 13.31% in 24 hours, Bitcoin only gained 1.21% in value, which may have led to further changes in investment flows. More investment needs to flow into Bitcoin to match the parabolic rise in price on January 8th. Entry in spot exchanges with active supply should decrease. As of now, 1Y-2Y active supply is high on all spot exchanges, and this largely represents miners and retail traders.
HODLers, who sell Bitcoin for over $ 40,000, are buying at the current price level, and the number of addresses with a balance of over 1000 BTC has increased since Bitcoin reached its latest ATH. While there is currently a fear of retracement and correction, corporate acquisition can help Bitcoin navigate the stock markets during periods of low volatility in the short term.
Think about this; Grayscale Bitcoin Trust rose from $ 1.8 billion to 17.5 billion AUM in 2020, according to the report. In general, conditions in the Bitcoin market have changed in the last 10 days, and each change has had an impact on what happens next for one’s portfolio. Away from Bitcoin, with more and more investments in Ethereum and the market’s altcoins, the altcoin season may have just begun.
Now, this could have a negative impact on the price in the short term. However, institutions like Grayscale and MicroStrategy are adding more Bitcoin to their assets, and this could alleviate traders’ fears in the long run. What’s more, this can also increase the price and Bitcoin may peak in the short term before the price rise continues on the charts.
Finally, the overt interest in Bitcoin remained largely the same, but the volume in Bitcoin Futures trading has declined. Also, it may take some time for the 200-day moving average to catch up.