In March 2020, the stock market dragged cryptocurrencies down to their Black Thursday bottom. Since then, however, soaring gold and silver prices have helped restore interest in Bitcoin and altcoins.
These hard, digitally scarce assets are expected to perform similarly to precious metals due to similar supply attributes. Still, it also could cause a disastrous crash in crypto as a result.
Silver and Gold Rally Ready For Pullback And Dollar Stages Overdue Recovery
The dollar has been in steady decline, with top financial market analysts from the likes of Goldman Sachs and more calling for its eventual demise. The once almighty dollar is at risk of losing its global reserve currency status, and it has caused a domino effect across the global finance market.
RELATED READING | GOLDMAN CHIEF THAT SLAMMED BITCOIN SAYS GOLD HAS NO ROLE FOR CLIENTS
Stocks have stayed relatively stagnant, waiting for news of the coming stimulus before reacting. Ahead of the United States government finalizing what the next round of stimulus entails, hard assets like gold, silver, and Bitcoin exploded over the last couple of weeks.
Gold set a new all-time high price record, and silver tapped nearly $30 an ounce. Investors flocked to these safe-haven assets with scarce supplies ahead of more money supply entering the market.
Silver and Gold Comparison | Source: TradingView
But the dollar is preparing a rebound, reaching the lowest level in two years and a point in sentiment in which reversals have occurred in the past. Various technical signals also suggest a resurgence in the global reserve currency is due.
It may be promoting profit-taking in silver and gold that could cause a short to medium-term pullback. And if crypto-assets like Bitcoin and altcoins remain correlated with precious metals, silver and gold toppling now could be disastrous for the asset class just getting started on a new bull run.
Bitcoin, Ethereum, XRP, and Other Altcoins May Fall If Precious Metals Melt Down
When gold set its record and silver soared, Bitcoin and major altcoins followed. The leading cryptocurrency by market cap breached above $10,000 and, in a flash, rocketed to $12,000. Ethereum is up over 200% year to date, and XRP, a poor market performer, saw a 45% weekly gain.
Altcoins especially are performing well, acting as the silver to Bitcoin as digital gold. And with these assets behaving similarity and sharing similar economics, the two classes of distinctly different assets could all fall together against the dollar.
Bitcoin, Altcoins, Silver, and Gold Comparison | Source: TradingView
Layering the same gold versus silver chart from above with Bitcoin and the total altcoin market cap shows an uncanny resemblance between them all. And although they are standing united, the only thing divided if they fall together will be any recent returns not already locked in for profit.
RELATED READING | WHY SILVER’S PERFECT STORM SURGE WON’T SPILL INTO CRYPTO
Is the gold and silver rally coming to a halt? And if so, will the crypto market feel the meltdown of these precious metals?
Image Courtesy of Deposit Photos.
Originally from Bitcoinist.com https://ift.tt/3ib6jgK
Leading global blockchain news provider. A blockchain, originally block chain, is a growing list of records, called blocks, that are linked using cryptography.