Bitcoin loses over $ 2,000, gold bounces off $ 1,800

Much lower volumes accompany today’s session due to the national holiday in the USA, but still, there’s something to focus on. The biggest story is Bitcoin yet again, where after testing record levels, there was a correction of more than $ 2,000. At one point, the loss was even over $ 3,000. Gold places itself in the center of attention by using the currently weaker dollar to correct losses therefore bouncing off the level of $ 1800 per troy ounce.

Crypto bulls collect profits 

Bitcoin fell more than $ 2,000 on Thursday, the largest one-day decline in nearly three months. The price of BTC is still about 21% higher this month and 138% year-on-year. It peaked at $ 19,497 on Wednesday but did not close the record at $ 19,666 in December 2017. The price correction may be mainly due to crypto traders moving larger volumes of bitcoins to exchange offices, where they are easier to sell at a better price as they approach $ 20,000. Looks like Bitcoin is getting to the breaking point. After all, it is a market like any other which means that it is subject to similar psychological effects that can be observed in other markets. After such a huge increase, the correction would simply make sense, and it seems that we are just at its beginning.

The growth of cryptocurrencies was partly ascribed to their very small correlation with the real economy, interest rates, and even other assets such as bonds, stocks, or gold. The ratio of risk to potential reward is simply very attractive for many investors, who are betting on the gradual devaluation of other assets due to strong monetary and fiscal stimuli. However, despite the correction, BTC may grow to $ 20,000 very quickly. A larger decline will certainly be perceived by many investors as an opportunity for further purchases.
Chart: BTCUSD Daily Chart (Source: Purple Trading cTrader)
Chart: BTCUSD Daily Chart (Source: Purple Trading cTrader)

Gold uses a weaker dollar 

It might be just a coincidence or it might as well be caused by the flow of capital from digital gold back to its physical form. Be that as it may, gold added 0.8% today and stood up after the sell-off in the last two weeks got the price at its lowest level since July. Gold traded inversely against the dollar index, although this relationship slightly broke during November. However, it was the weaker US dollar that helped out gold a bit today. This could mean that we may be on our way to correcting November's losses, to a level that formerly acted as very strong support but turned into resistance subsequently.

We perceive speculation on the growth of gold as a bit risky at the moment, as it has three weeks of declines and the foundation has turned in favor of bears. We are rather looking for trades on the short side, either when returning to the price band around the level of 1860, or a breakthrough of current support and following pullback.
Chart: EURCZK daily chart (Source: Purple Trading cTrader)
Chart: EURCZK daily chart (Source: Purple Trading cTrader)
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