How Gold Price can help in Bitcoin Price Prediction

Considering the pre-internet era, the only prominent trusted source of information was the television or the newspapers. These media had enormous outreach but the origin was limited. The world is within our reach with the computer and internet at our command. What if there was a way of making a transaction that didn’t require the use of trusted intermediaries and had direct peer to peer transaction? A Blockchain gets introduced which is an incorruptible digital ledger of economic transactions that can be programmed to record not just financial transactions but virtually everything of value.


A cryptocurrency is a digital asset designed to work as a medium of exchange that uses strong cryptography to secure financial transactions, control the creation of additional units, and verify the transfer of assets.

The most popular cryptocurrencies are Bitcoin, Ethereum, XRP, Iota, Cardano, Tron, Ripple, Monero, Litecoin and Stellar.

Cryptocurrencies like bitcoins have innumerable advantages over the existing substitutes like,

1. They are decentralized and operate on a public-distributed database which holds and encrypted ledger.

2. They provide Transparent Public Transaction record, i.e in the Bitcoin system, every transaction is made public and recorded in blocks which turns out to be a part of the blockchain.

3. Bitcoin is unhackable due to its fundamental depiction.


Bitcoin (BTC) traders could get cues from an apparent negative correlation that has developed between bitcoin and gold prices.

Gold picked up a strong bid at $1,196 on Nov. 13 and jumped to $1,300 on Jan. 4, possibly due to a sell-off in the weakening U.S. dollar. The greenback was down against most currencies in last two months of 2018 on growing speculation that the Federal Reserve (Fed) could decrease or pause interest rate hikes in 2019.

Bitcoin, however, did not benefit from that broad-based sell-off in the dollar. The cryptocurrency instead saw a revived bear market with a convincing move below $6,000 on Nov. 14 – a day after gold found takers around $1,200 per ounce.

That price action indicates that the two assets are inversely correlated. Validating that argument is the 90-day correlation coefficient of -0.593. The statistical measure ranges from -1 to 1, with a negative number representing the inverse relationship between the two variables, while a positive number implies direct correlation.

As a result, the leading cryptocurrency by market value could be influenced by the next move in gold prices. Currently, the safe haven metal is trading at $1,285, having hit a three-week low of $1,276 earlier this week.

Meanwhile, BTC is trading in a narrow range above $3,500 for the 13th straight day. The prolonged period of consolidation could end with a strong bullish move if the corrective pullback in gold worsens.

It is worth noting that correlation is not causation and only describes the relative change in one variable when there is a change in another.

Gold and Bitcoin Chart
Gold and Bitcoin Chart

As seen above, bitcoin and gold have moved in opposite directions since late November.

Gold rallied 8.33 percent in seven weeks leading up to Jan. 4. During the same time, Bitcoin depreciated by 50 percent.

Further, gold’s repeated failure at $1,300 has established that psychological level as a stiff near-term resistance. Meanwhile, Bitcoin has defended $3,500 since Jan. 11.

The cryptocurrency could see a strong bullish move if the pullback in the yellow metal gathers steam.


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