Gold is going through the longest period of depreciation in the last century. The precious metal, which has been declining continuously for the past ten days, last experienced this series in February 1920. According to data provided by Katie Greifeld, who holds senior positions in US-based financial analysis companies, gold fell 27 percent from its historical peak in January during this period.
Gold, which tested the $ 4,090 level with the effect of the decline, found support at the 200-day moving average, which is frequently followed in the markets. This technical level is considered an important indicator in determining the strength of long-term trends.
Gold Efforts to Recover from the Decline
Despite this sharp decline in gold, there has been a recovery of approximately 2 percent in the last 24 hours. This increase indicates that the series of declines in the markets may end. In the period that started with the escalation of tension in the Middle East at the end of February, the total loss in gold reached approximately 12 percent.
On the Bitcoin side, a completely different picture draws attention. The crypto asset, often referred to as digital gold, managed to hold on above the $70,000 band. This led to the bitcoin/gold ratio in the market being just under 16 ounces. The rate in question was around 12 ounces before the conflicts in the Middle East began. In other words, bitcoin’s performance against gold increased by approximately 30 percent during this period.
Bitcoin’s Strength Against Gold Increases
Charlie Morris, an investment manager at crypto analysis company ByteTree, drew attention to the historical progress of bitcoin against gold. Recalling the period when bitcoin exceeded the value of one ounce of gold for the first time in 2017, Morris stated that these rates constantly increased in the following years. It was reported that it reached 2.7 ounces in 2019, 3.4 ounces during the 2020 pandemic period, and 9.1 ounces after the FTX collapse. This rate, which was 12.4 ounces in February, has now reached around 16 ounces, approaching a historical level.
“With gold looking weak, I see it as a reasonable expectation that 1 unit of bitcoin will become more valuable than 40 ounces of gold in the coming months or years,” Charlie Morris said. he commented.
Looking at historical data, bitcoin often lags behind gold in market cycles. Generally, gold first experiences a rapid rise, then prices stabilize and bitcoin begins to come to the fore during this period.
Eric Balchunas, an ETF analyst at Bloomberg, emphasized that there is no adverse relationship between the two assets and that their correlations are largely independent.
Eric Balchunas stated that there has been an outflow of billions of dollars from gold-focused ETFs such as SPDR Gold Trust and iShares Gold Trust in the last week.
On the other hand, it was recorded that there was an inflow of approximately 2.5 billion dollars into bitcoin-focused ETFs this month. Since the beginning of the year, the net outflow in bitcoin ETFs has remained only around 140 million dollars, while the bitcoin price maintained investor interest despite a decline of nearly 20 percent during this period.
