Bitcoin has slipped below crucial support levels after peaking at $11,200 last week. The coin now trades at $10,400 as of this article’s writing, below supports in the $10,500-11,000 range that is so important for BTC.
Bitcoin’s drop comes as the price of gold has dropped lower, towards $1,900, then under it. Both assets seem to be moving in tandem due to the strong force the U.S. dollar has on all markets.
The U.S. dollar is up from the lows of a few weeks ago as fiscal stimulus has slowed.
Related Reading: MicroStrategy’s Stock Continues to Soar After Bitcoin Purchase
Bitcoin Could Enter a “Nose Dive,” Analyst Fears
Analysts fear that Bitcoin could drive lower if the price of gold continues to slip.
The head of technical analysis at crypto research firm Blockfyre shared the chart below on September 22nd, writing:
“$XAU vs $BTC Looks like the BTC 6k bottom. Before it fell off a cliff. Both could easily go for a nose dive soon.”
The chart shows that gold is breaking down from a pivotal support pattern it has held for the past two months. Simultaneously, it has formed lower highs, suggesting the formation of a descending triangle on a flat base, which has a high likelihood of breaking lower.
Chart of gold's price action over the past few months with an analysis by the head of technical analysis at crypto research firm Blockfyre, Pentoshi (@pentosh1 on Twitter). Chart from TradingView.com
He added that this looks very similar to Bitcoin’s descending triangle formation in 2018, which triggered a 50% retracement.
The analyst thinks that if gold plunges lower, Bitcoin could drop with the precious metal. These markets have been somewhat correlated since the March correction.
Related Reading: Critical On-Chain Signal Predicts That Bitcoin’s Next Move Will Be Upward
On-Chain Trends Beg to Differ
On-chain trends beg to differ: that’s to say that on-chain trends predict that Bitcoin will continue to move higher instead of plunging lower.
“Overall, I’m not expecting any mega dump, some chance of smaller whipsaws in the short timeframes, resistance is teetering. Not a bad time to get in if you’re a spot investor, given the longer range macro. There’s plenty of buy support below 10k, this is a buy the dip scenario.”
Bitcoin’s price action, though, may be dictated by legacy markets at the end of the day, at least in the near term.
Related Reading: Ethereum Transaction Fees Surge to All-Time Highs After Uniswap Launch
Featured Image from Shutterstock Price tags: xbtusd, btcusd, btcusdt Charts from TradingView.com Bitcoin Could Soon Enter a "Nose Dive" as Gold Loses Key Support Level