BTC recently formed an M-shaped top on the daily chart, with the key point being the neckline near 111,900 . A breakout above and a sustained level of 112,000 would signal a potential trend reversal; otherwise, it would simply be a rebound within a downtrend. To put it bluntly, the market will either head north or south by the beginning of next week; the direction is about to be revealed.
There's also plenty of external news: Trump just replaced the head of the Department of Labor, so Thursday and Friday's non-farm payroll figures are likely to be relatively mild. Federal Reserve officials have even taken precautionary measures. Let's hope BTC sees another "real reversal," similar to its previous false break below the MA120 level.
Why did gold suddenly surge?
The European bond market collapsed, but gold hit a record high. The logic behind this can be analyzed in several steps:
- Global money printing : With more and more money, everything will increase in price, and gold's anti-inflation properties will be directly put into practice.
- Global conflicts : Buy gold in troubled times, such as Russia-Ukraine, Israel-Palestine... These conflicts are endless, so there is naturally a strong demand for gold.
- Global major buyers : Central banks are the biggest contributors, increasing their holdings for nine consecutive months; even the Federal Reserve imports gold from Switzerland. With major buyers pouring in real money, how could prices not rise?
- Global credit is damaged : The US is spending nearly a trillion dollars in interest annually and issuing new bonds daily. With its credit damaged, the market is turning to gold as a hedge.
These four logics have existed for a long time, but the recent surge in gold prices is likely due to a problem with the "damaged credit" logic.
Cracks in the US dollar's credit
The US dollar and gold are old rivals. When US debt becomes problematic, gold prices tend to rise. Several recent details are particularly crucial:
- Trump called for replacing the Federal Reserve Board members : This directly affected the "independence" of the Federal Reserve, and the global market's confidence in the US dollar was naturally discounted.
- At the annual meeting of global central banks on August 22, Powell announced a rate cut : short-term bonds were fine, but the price of 30-year U.S. Treasury bonds fell and the yield rose - indicating that the market is not buying into the long-term credit of the United States.
- Virtual currencies were also hurt : BTC weakened simultaneously after this because the market saw through the US's intention to dollarize cryptocurrencies.
To sum it up in one sentence: When the credit of the US dollar is discounted, gold becomes the only reliable safe-haven asset.
The vote of global capital
What’s even more interesting is that gold buyers are changing:
- For the first time since 1996 , global central banks hold more gold than U.S. Treasuries.
- The largest gold ETF in the United States was bought up in large quantities , and Wall Street was behind it.
The two buyers with the most pricing power in the world are the central bank and the capital tycoon. They are both telling us with real money: gold is the ultimate answer to risk aversion .
My opinion
BTC is expected to face a near-term battle for its neckline, while gold is steadily gaining ground amidst global credit turmoil. BTC needs to break through 112,000 for a reversal. As for gold, as long as the dollar's credit remains discounted, it could surge.
So don’t forget this: gold is the real “trump card in troubled times”, and BTC can only be regarded as a youthful version of a hedging tool.
That’s all for now! If you’re still unsure about your direction in the crypto, why not join me in making a plan? I’ll wait for you to come. Otherwise, in the next wave of market, you may be the one standing on the other side again.
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