Bitcoin Crashes 30% Against Gold, Here’s Why Peter Schiff Warns Further Dip

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As a researcher with a background in finance and experience following the cryptocurrency market, I find Peter Schiff’s analysis of Bitcoin’s performance against gold and the potential impact of the Mt. Gox reimbursement on the BTC price concerning. Schiff’s comments come at an especially critical time for Bitcoin as it faces multiple headwinds, including the upcoming release of Bitcoin holdings from the defunct Mt. Gox exchange.

Bitcoin (BTC) has experienced rough seas lately as its price took a significant dive, dropping over 20% from all-time highs and falling beneath the crucial $59,000 threshold. Notable economist and outspoken Bitcoin critic Peter Schiff has drawn attention to this downturn, highlighting an even more pronounced decrease in Bitcoin’s value when compared to gold.

Peter Schiff Spotlights Bitcoin Vs Gold Performance

As a crypto investor, I’ve been keeping a close eye on Peter Schiff’s latest analysis. He’s pointed out that Bitcoin has dropped more than 30% in terms of gold value, suggesting a tougher bear market ahead for BTC. This comes at a critical moment, as Bitcoin faces several challenges. One major concern Schiff raised on his social media platform (formerly Twitter) is the upcoming release of Bitcoin holdings from the defunct Mt. Gox exchange.

As a researcher studying the history of Bitcoin, I can share that Mount Gox, which previously processed around 70% of global Bitcoin transactions, ceased operations in 2014 following a string of calamitous hacks and mismanagement. Regrettably, these incidents resulted in the unfortunate loss of hundreds of thousands of Bitcoins. More recently, after almost a decade of intricate legal and financial negotiations, Mount Gox made an announcement regarding the initiation of reimbursement processes.

Starting July 2, the defunct cryptocurrency exchange will repay its creditors with both Bitcoin (BTC) and Bitcoin Cash (BCH). However, some investors express apprehension about this mass distribution of Bitcoin. The worry is that once these long-waiting claimants receive their Bitcoin, they may choose to sell it immediately, thereby increasing the supply in the market and potentially causing a price decrease.

Expert: Mike McGlone, a Senior Commodity Strategist at Bloomberg, expressed his concern about Bitcoin’s performance in comparison to gold. In a recent post on his platform X, he pointed out that “The extended 20% surge of the S&P 500 over its 100-week moving average has historically been unfavorable for Bitcoin relative to gold.”

I’ve taken note of two key insights from the chart showing Bitcoin’s beta hitting the 20% mark in March, around the same time when an ounce of gold was equivalent to 33 times the price of Bitcoin. The first observation is that the crypto-to-metal cross has shown divergent weakness. Secondly, there exists a risk of downside reversion.

Contributing to the pessimistic viewpoint, there was an outflow of approximately $1.2 billion from digital asset investment products. A significant portion of this, around $630 million, came from Bitcoin sales, suggesting institutional sellers were responsible for the downturn. The majority of these sellers were based in the United States and Canada.

What’s Next For BTC Price?

Bitcoin miners have been disposing of their Bitcoins due to the decreased rewards from the latest halving event, which lowered the rewards from 6.25 BTC to 3.125 BTC. In June, they sold around 30,000 BTC, equivalent to roughly $2 billion. Furthermore, the German government disposed of over $3 billion worth of Bitcoins.

The fluctuations in Bitcoin’s price are influenced by more than just its own market dynamics. Factors such as increasing interest rates and investor exhaustion have fueled pessimistic attitudes among traders. Furthermore, the significant support threshold at $60,000 has been broken, which has traders worried about a possible decline to $46,600.

Furthermore, technical analysis adds to the worry as the price reached a peak around $70,000, forming a double-top pattern. Additionally, the daily chart shows a “death cross,” which suggests a prolonged drop in the market. Yet, some analysts remain optimistic about the possibility of a price recovery.

As a dedicated researcher in the field of cryptocurrencies, I’ve come across an intriguing observation from the well-respected analyst Ali Martinez on platform X. He highlighted that the TD Sequential indicator has triggered a buy signal on Bitcoin’s daily chart, which could potentially indicate a short-term price recovery. Moreover, it’s essential to mention that Bitcoin’s Relative Strength Index (RSI) has dipped into oversold territory recently. Historically, this condition has been preceded by considerable price increases.

Martinez shares a bullish outlook, supported by historical trends. Bitcoins’ previous significant price increases occurred following oversold Relative Strength Index (RSI) readings. He pointed to specific instances over the past two years where Bitcoin experienced gains of 60%, 63%, and an astonishing 198% after reaching comparable RSI thresholds.

Additionally, should Bitcoin reach $63,700 again, it might result in approximately $57.85 million in short sellers being forced to buy back their positions, possibly boosting the price further. On June 28, there is a Bitcoin options expiry with a total value of $6.72 billion to be settled. The market anticipates a bearish stance from investors as the most likely price for this event is currently set at $57,000. Furthermore, the release of the Federal Reserve’s PCE inflation data on Friday may lead to heightened volatility within the market.

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2024-06-25 11:28