On November 25, 2020, the prices of all popular cryptocurrencies, including Bitcoin, witnessed a downtrend. Major cryptocurrency analysts agreed that this price correction was due to the upcoming Black Friday sales, for which holders were selling their cryptos for cash. A major reason for these huge withdrawals was the fact that cryptos are still not accepted as a currency for payment at the biggest retail outlets.
And just after two days, on November 27, two major news shook the market. One was the US President Donald Trump’s announcement on COVID-19 vaccine deliveries to be started that week and the other was the slaughter of the Iranian nuclear scientist. The Volatility Index or VIX dropped sharply, the Gold prices continued their downtrend along with Silver. But in stark contrast, the prices of Bitcoin and Ethereum started to rise and reach new highs. The positive market for cryptocurrencies once again proved that digital gold has a greater valuation than traditionally safe assets. Statements from experienced analysts and the reports of the Central Banks’ Digital Currency researches also back the notion that the value of traditional safe assets or bullions is diminishing.
As the prices of Bitcoins were compared with that of the other assets, it will be judicious to review each of them individually.
As per the analysis charts for Gold, the prices remain weak and under the dynamic support prices and moving average prices. Present-day Daily charts for the traditional asset Gold predict a probable end of this phase of correction in prices as the Fibonacci level has reached 0.5. The prices are testing an important support price of $1764. From a 4-hour chart, it can be deduced that Gold prices have tested this support many times and continue to remain above $1764.
On analysis of Relative Strength Index or RSI, the patterns are found to be divergent and on November 24 Gold has tested the oversold levels with the RSI at 21.640. As per the current RSI, the precious metal may test $1817 levels that hold both static and dynamic resistance and the 50-day EMA.
Digital Gold is surely positioned at better levels compared to the traditional asset. At the time of writing this report, the price of Bitcoin has already reached a high of $19252 and is steadily rising. If this uptrend continues, the prices of BTC/USD may hit $20,000 today and will soon touch a new YTD (Year to Date) high. Studying the 4-hour chart for Bitcoins, it can be deduced that the previous downtrend in price was a correction that was testing the dynamic support so that the prices bounce back to an uptrend channel. Another reason for the continuous growth in prices of Bitcoins may be the weak US Dollar, which is now below the support of 92 losing 0.27%.
The RSI levels for Bitcoins indicate that the price of this crypto is close to being in the overbought zone but the positive market sentiments show that $20k cannot stop this growth and the BTC/USD prices will rise to reach a new high. The strong resistances may be broken soon and Bitcoin prices may close above $20k and even reach $20430 to $20500.