In the fall of 2021, Bitcoin is emerging from a protracted crisis and rewriting historical highs. The increased interest of institutions and the start of a new wave of coronavirus helps in this. This process is accompanied by the expansion of the possibilities of using cryptocurrency and the growth of the independence of the asset as a financial instrument. It is worth noting that the coin is losing its connection with both classic instruments and the altcoin market, which shows a moderate decline rate during the BTC correction.
However, the main analytical conclusion of recent months was the decrease in the correlation between bitcoin and the precious metals market. This is reported by the analytical company IntoTheBlock. According to the study, bitcoin is the least correlated with gold: the index fell to 0.49. The decline began as bitcoin was approaching a new all-time high. The similarity of the quotes of the first digital asset with silver and a paid asset has also significantly decreased, although it is still far from the indicators of mid-August. At the same time, ETH, on the contrary, has increased its correlation with gold, and the movement of altcoin with silver is identical to that of bitcoin.
The main reason for the uncorrelation was the change in the investment vector, according to which more and more institutional investors prefer bitcoin over gold. As of the end of October, the coronavirus crisis escalated again, forcing many large companies to look for capital bailouts in bitcoin. The situation was successful for BTC due to the coincidence of inflation escalation and the start of a bull market for the asset. In such conditions, the central banks of the countries and pension funds of the states began to invest in the asset. Thanks to this, gold began to lag behind bitcoin in terms of investment attractiveness.
Investment injections of fintech companies also played an important role in this, which opened BTC to the world community as a means of hedging risks. Analysts found that the first crypto asset significantly increased the correlation with the stocks of companies such as PayPal, Square, Bakkt, Gemini, and Voyager. However, bitcoin has established the maximum level of correlation with MicroStrategy, which is not surprising given the company's colossal investment.
Due to the establishment of new highs and going beyond the usual ranges of fluctuations, bitcoin and the cryptocurrency market are becoming more independent from the traditional stock markets. The decline in correlation can be seen as another step for BTC to position itself as a viable alternative to gold. And the current coronavirus crisis will complete the formation of a new favorite in the framework of inflation protection. Ethereum is also striving to become a deflationary asset, but until the full transition to version 2.0, the altcoin is not a competition to BTC.
Meanwhile, Bitcoin continues to recover and a retest of the $63k resistance zone will take place soon. On the daily chart, MACD continues to move sideways, despite the formation of a local bullish crossover, which indicates that the current dynamics of price movement is preserved and the beginning of a local period of accumulation. However, the first signals for stabilization of the situation and an upward movement are already visible in the stochastic, which has made a bullish crossover and is actively growing. The relative strength index also consolidated above the 50 mark and is confidently moving up.
Despite the bullish signals, buyers are still weak and bearish pressure is intensifying due to local correction and profit taking. Given the growing on-chain activity and transaction volumes, the market is preparing to push the price up from the $62k - $64k range, and therefore it is worth waiting for BTC to return to systematic growth by the middle of next week.
Ethereum also underwent a correction, but not as powerful as Bitcoin, which indicates the growing independence of the altcoin as a financial instrument. As of 13:00 UTC, the coin is trading in the region of $4.1k with daily trading volumes in the region of $16 billion. ETH feels confident as it consolidates above the supertrend line, which indicates stabilization of the situation and the emergence of strong buyers.
The technical indicators of the asset have managed to gain a foothold in safe areas, complete the cycle of consolidation and begin a period of growth. There are no clear signals for an upward movement yet, but it is most likely that on Tuesday a breakout of the absolute record line and further movement to a new maximum will take place. In the near future, the coin will break through $4.2k and $4.4k, after which it will begin its path to a new historical record.