Despite a weaker Q2' 2023 performance so far, BTC has still outperformed the other major commodities in the group
Let’s start off with some price action in BTC/USD — the broader trend in the pair remains bullish despite the recent consolidation. The upward movement on Monday surpassing the initial limit at the mid-May peak of $27,675 has somewhat alleviated the downward pressure on the premier digital asset. Nevertheless, unless BTC/USD breaks through the $30k level, the most probable direction remains sideways or slightly downwards.
As prices remain constricted and volatility builds up, the Bitcoin market appears increasingly poised to break free from its current state of equilibrium. Looking at the top left chart, we can see that BTC and commodities have exhibited a tighter correlation since last June — first in the downtrend and then in the bullish trend which started in Nov. 2022. From October 2022 onwards, there has been a noticeable increase in global market liquidity, leading to a positive and increasingly correlated response in digital assets and precious metal prices.
From October 2022 onwards, there has been a noticeable increase in global market liquidity, leading to a positive and increasingly correlated response in digital assets and precious metal prices. Currently, both asset classes are undergoing their second corrective upturn of the year, with BTC and Silver experiencing a decline of -10.8% and -10.6% respectively from their respective 90-day peaks.
Gold has shown the strongest resilience, with a drawdown of -5.4% thus far, while WTI Crude Oil prices continue to face difficulties, remaining range-bound and down -12.1% since the April high. In the past 90 days, Crude Oil has experienced a decrease of -4.0%, whereas Gold and Silver have both witnessed significant rallies of 7.5% and 12.7% respectively.
On the other hand, Bitcoin has continued to outperform, maintaining a 14.5% increase from the February closing price (top right chart). Although BTC’s performance is not as strong as its peak performance in the first quarter, which was 72%, it remains the top performer among these major commodities.
The digital asset market continues to surpass major commodities in terms of performance in 2023, although all are currently undergoing a significant correction. After recovering from the downturn of the 2022 bear market, Bitcoin investors now find themselves in a state of equilibrium, where there is little bias towards either upward or downward movement. However, due to the exceptionally low volatility and narrow trading ranges observed recently, it appears that this equilibrium is about to be disrupted.
Originally Published on Medium
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