Bitcoin Breakout Looms as Gold hits a potential Top

Amid the back-drop of tariff wars and real wars, gold has proven to be the safe haven once again. The price rocketed to $3,040, but has just hit the top of its ascending channel, and has been rejected. Is it time for Bitcoin to take over? If news is good out of Wednesdays FOMC meeting, can Bitcoin break out?

Source: TradingView

The surge in the gold price since October 2023 has probably reflected the uncertain economic and geopolitical environment, which have arguably both worsened since this point in time.

Besides being the traditional haven of safety in a period such as this, gold has its own current story to tell as to why its price is increasing so rapidly.

Why is COMEX cancelling gold contracts?

For a start, COMEX (Commodity Exchange), the big gold exchange in New York, is cancelling some of its contracts, and is also moving a lot of gold from London to New York. Why is this?

There are several reasons. Firstly, many more people want real gold and they are not prepared to accept a cash settlement. Instead, they are standing for delivery, which means that the COMEX needs far more gold in its warehouses.

Secondly, the relatively new Basel 3 rules require that banks, and exchanges like the COMEX, hold more real gold, rather than just paper promises.

Thirdly, people are becoming more worried that President Trump might slap tariffs on the import of gold. Therefore, traders are moving the gold now, before any potential tariffs kick in.

It also has to be borne in mind that moving gold is no easy process. Part of this is that the gold in Londons LBMA is in bigger sized bars than those used in the COMEX, so the London bars have to be melted down and recast into smaller bars. If you add to this the time taken for all this to take place, and then the shipping and transport, it is for these reasons that the COMEX has started cancelling contracts. This vicious circle is no doubt what has led to the surge in the gold price.

All that said, the gold price has just hit the top of its ascending channel. Could the price pause for a while and then break through? Or could the price make a correction and then just rise again? Yes, these are both viable options. However, if the tone that comes out of todays FOMC meeting is dovish, it could be Bitcoin that takes over the reins.

$BTC price at the verge of a breakout

Source: TradingView

The Bitcoin price has held up a lot better than the U.S. stock market so far. Where the S&P 500 has recently been rejected from the 5,670 level, $BTC has generally chopped sideways.

A modicum of support has been forming at the $80,000 level, and there is truly heavy support at $73,000 down to $68,000. However, it may be that Bitcoin doesnt get down there.

Up around 1% on Wednesday so far, the $BTC price will later today enter the pre-FOMC announcement volatility zone. Bitcoin is currently right at the breakout point of the descending trendline, and the bulls could push the price through with a low time frame confirmation on the other side. However, in the hours before, during, and after the end of the FOMC meeting, market makers will be looking for the opportunity to liquidate any short or long traders that jump too early onto any particular bandwagon that is heading north or south in price.

Major indicators signal a Bitcoin bounce

Source: TradingView

Moving out into the weekly view of the $BTC chart, it can be seen that things are starting to look good. Once the dust has settled from the FOMC meeting, and supposing that Fed Chairman Powell has not put the fear of God into the market, it might be expected that this first early sign of a bounce continues.

The RSI, and the Stochastic RSI indicators at the bottom of the chart are both currently signalling an upturn. There is still the rest of the week to play out, but if these indicators remain in their present positions, look for more Bitcoin price growth heading into next week.

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

Text source: Crypto Daily™

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