Different assets can be traded against one another to maximize profit potential. A few platforms let users trade between Bitcoin and gold at their own leisure, which can lead to some very healthy profits across the board. The current sentiment certainly warrants further exploration of this trading pair.
The XAU/BTC Trading Sentiment
There have been times when the price of Bitcoin was relatively low, and the value of gold appreciated in the same period. During those times, it makes perfect sense for traders to buy gold with Bitcoin, through the XAU/BTC trading pair.
On other occasions, such as the current momentum, Bitcoin is appreciating in value. Although the value of gold has held its own relatively well, the XAU/BTC pair is currently shifting in favor of the world's leading cryptocurrency. It is, by looking at the chart below, a good time to trade in gold in favor of Bitcoin.
Bollinger Bands: As can be seen on the chart above, XAU/BTC is currently subject to relatively narrow Bollinger Bands. That is interesting for many different reasons. First of all, it hints at little volatility, potentially confirming that this trend favoring BTC will not reverse course just yet. Secondly, it shows that Bitcoin is pushing very hard to remain above $10,000 - although the momentum can fall apart quickly.
Moving Averages and RSI: The XAU/BTC pair looks very interesting when looking at the moving averages. The current ratio sits below the 200 MA, following a bearish crossover between the MA20 and MA200. As far as the MA50 is concerned, it too remains on a bearish slope, and could dip below the MA200 in a few days from now.
The RSI doesn't offer too much optimism for gold speculators either. An ongoing declining trend has kicked in on May 25th, and it is still sloping down a week later. During the previous drop, the RSI decline lasted for nearly three weeks. As such, a further decline in favor of Bitcoin is a likely outcome.
What is Influencing the Gold Price?
Many individuals remain confident that the year 2020 will be incredibly bullish for gold. Analysts at Bank of America project a price of $3,000 per ounce by late 2021. Assuming that vision comes true, well-known gold bugs such as Peter Schiff, Adrian Ash, and James Rickards will see their optimistic outlook come true.
Other developments in the industry cannot be overlooked either. Several factors currently in play warrant a higher price for gold. If that happens, it will have a direct impact on the XAU/BTC ratio as well.
Newly announced stimulus packages in Japan and New Zealand will help shake things up. There is also the ongoing political tension between the US and China, which affects the global monetary system in different ways. A somewhat unexpected interest rate cut in Turkey will force more people to explore alternative investments, including cryptocurrencies.
