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Breaking News: Coinbase Confirms DOJ Investigation Following Major Security Incident

Bear Trap: Will Bitcoin Mimic Gold in Reclaiming Long-Term Trend Line?

Tony "The Bull" Severino
Tony "The Bull" Severino
5 years ago
3 mins read
gold bitcoin bear trap

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Bitcoin and gold have been tracking alongside one another for nearly two years now as the global economy inches closer and closer to total collapse.

If the correlation continues, the latest drop in Bitcoin will be nothing more than a bear trap designed to shake out investors before the asset reclaims a long-term trend line and continues its ascent toward new all-time highs.

Correlation Continues Between First-Ever Cryptocurrency and Precious Metal

The argument over if Bitcoin truly is a safe haven asset like gold and other precious metals continues, as the two assets have shown an uncanny correlation in the past.

The correlation has gone on forward first spotted following Bitcoin’s 2017 peak, but the comparative price action really ramped up in early 2019, as a trade war between China and the United States started to brew.

Related Reading | Becoming a Safe Haven: A Year of Bitcoin Correlation With Gold 

In early 2019, both assets began a new bull run and spent the next few months rallying. Both eventually experienced a pullback in mid-2019, but later began to pick up steam late into the year and into early 2020.

At the start of 2020, both assets began to skyrocket, as fears over a possible pandemic began to grow.

These fears eventually became reality, and panic spill into financial markets. The result was record-breaking drops in major stock market indexes, gold, and Bitcoin. Some assets, like silver, had over a decade worth of growth wiped out in hours.

But now both assets are recovering once again, and are ready to prove themselves as safe-haven assets in the face of the coming economic crisis.

Will Bitcoin Continue To Follow Gold With a Bear Trap Shakeout?

Along the way up, gold broke down from a long-term trend line. During the recent collapse across all markets, Bitcoin lost its long-term trend line also.

Gold’s break below the long-term trend line was a bear trap designed to shake out investors and force them to buy back higher, further driving the price of the asset upward.

The same breakdown of a long-term trend line just happened in Bitcoin markets, and the price action and signals on the relative strength index appear to be eerily similar to that of gold when the bear trap happened.

The combination of the two assets pacing together accurately for some time, and the fact that both price action and indicators are showing strong resemblance, gives the theory additional credence.

Related Reading | Stocks Limit Up, Gold Revisits High, is Bitcoin About To Pump?

However, it’s worth noting that the timescales are drastically different between the two assets, so the comparative analysis should be taken with a grain of salt. But given how close the two assets have been correlated, a bear trap in Bitcoin is very possible.

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Tony "The Bull" Severino
Tony "The Bull" Severino

Tony "The Bull" Severino

Tony "The Bull" Severino, CMT, is a distinguished figure in the cryptocurrency analysis sector, renowned for his in-depth technical expertise and innovative approach to market trends. As the Head of Research at NewsBTC, Tony leads a team dedicated to providing cutting-edge insights and forecasts, helping both novice and experienced traders navigate the complexities of the crypto market.
A seasoned Chartered Market Technician, Tony's prowess in identifying and capitalizing on market patterns is unmatched. His academic and professional journey in market analysis has firmly established him as a leading authority in technical trading strategies. Tony’s approach is heavily influenced by the principles of Elliott Wave Theory, a method known for its rigorous assessment of investor psychology and price movements.

Read more

Beyond his role at NewsBTC, Tony is the visionary founder of CoinChartist.io, an educational platform aimed at demystifying the nuances of cryptocurrency trading. CoinChartist.io serves as a valuable resource for traders seeking to enhance their technical analysis skills. The platform offers a range of learning tools and resources designed to empower traders with the knowledge to make informed trading decisions.

In addition to his educational initiatives, Tony is a prolific author and a dominant voice in the crypto community. He writes the CoinChartist VIP newsletter, a weekly dispatch that has become a staple among crypto enthusiasts, revered for its insightful analysis and actionable trading advice. This newsletter has consistently ranked as a best-seller on SubStack, boasting thousands of subscribers who rely on Tony’s expertise to guide their trading strategies.

Tony is also celebrated for his literary contributions to the field. He is the author of the highest-rated Crypto Trading Journal on Amazon.com, a testament to his ability to communicate complex trading concepts in an accessible manner. This journal is widely regarded as an essential tool for traders aiming to track their progress and refine their strategies.

Before his ascent in the financial analysis world, Tony honed his skills in journalism. His background in this field has endowed him with a unique ability to present intricate market dynamics in a clear and compelling manner, making his insights highly sought after by a broad audience that ranges from casual readers to professional traders.
His professional affiliations underscore his commitment to excellence and continuous learning. As a partner of Elliott Wave International and TradingView, Tony collaborates with other leading experts to enhance his knowledge and skills. His active membership in the CMT Association further aligns him with the highest standards of industry practices and ethics.

Tony’s nickname, "The Bull," aptly reflects his aggressive and optimistic outlook on the cryptocurrency markets. His forecasts often anticipate significant upturns, earning him a reputation for bullish predictions that have frequently led to lucrative outcomes for those who follow his advice.

In summary, Tony "The Bull" Severino, CMT, is more than just a technical analyst; he is a mentor, educator, and innovator whose influence in the cryptocurrency space continues to grow. His dedication to advancing the understanding of market forces and his commitment to providing high-quality, reliable analysis make him a pivotal figure in the world of cryptocurrency trading.

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Disclaimer: The information found on NewsBTC is for educational purposes only. It does not represent the opinions of NewsBTC on whether to buy, sell or hold any investments and naturally investing carries risks. You are advised to conduct your own research before making any investment decisions. Use information provided on this website entirely at your own risk.

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Reason to trust

Strict editorial policy that focuses on accuracy, relevance, and impartiality
Created by industry experts and meticulously reviewed
The highest standards in reporting and publishing
How Our News is Made

Strict editorial policy that focuses on accuracy, relevance, and impartiality

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