Retail sentiment and gold’s price trajectory
Retail trader data shows 66.31% of traders are net-long, with the ratio of traders long to short at 1.97 to 1. The number of traders net-long is 4.41% higher than yesterday and 7.80% higher than last week, while the number of traders net-short is 8.05% higher than yesterday and 2.21% lower than last week.
We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests gold prices may continue to fall.
Bitcoin’s surge amidst market volatility
In contrast to gold, Bitcoin traders are enjoying a renewed bout of volatility, with the largest cryptocurrency by market capitalization currently eyeing a test of levels last seen in December 2021. The recent post-ETF sell-off and rally have pushed BTC/USD back above $48k, with the January 11 high at just under $49k seen as the next target. Above here, there is little in the way of resistance on the weekly chart before $52k comes into play.
Countdown to the bitcoin halving event
The latest rally is driven not just by the successful release of a range of spot Bitcoin ETFs over the last month but also by the Bitcoin halving event expected on April 17. Bitcoin halving is an event that occurs approximately every four years and is programmed into Bitcoin’s code that cuts miners’ rewards for adding new blocks to the blockchain by 50%.
This reduction in supply leads to increased scarcity and, if demand for Bitcoin remains constant or increases, drives the price of BTC higher. In 2012, the halving cut BTC mining rewards from 50 BTC to 25 BTC, in 2016 from 25 to 12.5 BTC, and in 2020 from 12.5 BTC to 6.25. In next year’s halving – expected in mid-April – the reward for mining a Bitcoin block will be cut to 3.125 BTC.
Bitcoin weekly chart
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