5 min readBitcoin has steadied above 108k on Wednesday, having faced rejection at the 50 SMA resistance in the previous session. While the broader market remains cautious, institutional demand is experiencing a resurgence, providing some support. Investors are also watching closely to see if the sharp sell-off in Gold may result in a rotation into BTC.
On Tuesday, Bitcoin briefly spiked to 114.5K, boosted by easing US-China trade tensions. President Trump and China’s Xi Jinping are due to meet at the end of the month, which is expected to help thaw trade tensions further.
The easing of trade tensions between the world’s two largest economies, combined with the recent rise in the US dollar and a technical correction, sent Gold prices sharply lower. Gold fell from a record level of 4381, dropping 6% yesterday, and is falling a further 2.5% today, marking its largest two-day decline in almost a decade.
Will a near-term Gold peak fuel a rotation into BTC?
Profit taking combined with a technical correction points to a possible near-term gold top for Gold, which means that money could look to rotate now towards other assets, as the parabolic rally ends. Gold surged 25% across just two months, which made it an extreme outlier across asset classes.
As market participants sell out of gold, the question arises whether investors will rotate into Bitcoin. History suggests that the rotation from gold into Bitcoin isn’t unusual.
In April, when gold dipped, Bitcoin surged. Now Gold has fallen 8%, and Bitcoin has at least steadied its recent selloff. Even a small 3 to 5% shift of Gold into Bitcoin could significantly boost the BTC price, potentially doubling it.
Attention will now turn to macro drivers. The US government shutdown is ongoing, and President Trump has rejected an offer by the Democrats to continue the meeting until the shutdown ends. With the shutdown showing few signs of easing, U.S. economic data will remain scarce.
Still, US inflation numbers will be released on Friday and are expected to show that CPI remained at 3.1% year on year. Softer inflation numbers and any signs of a stable government can see risk appetite return and help drive a rotation into BTC.
However, the risk is that CPI has been rising for the past six months, and a hotter-than-forecast reading could unnerve the market and hurt risk sentiment.
Institutional demand returns
Institutional demand revived on Tuesday. According to SoSoValie data, Bitcoin ETFs recorded $477.19 million in inflows yesterday, snapping a 4-day streak of outflows. If inflows continue to intensify, they could help to support the BTC price higher.
Bealls becomes the first national retailer to accept crypto payments.
Bealls, the century-old US retail corporation, has announced that it has started to accept crypto payments in its stores. The retail giant has partnered with Flexa to accept BTC, ETH, nd USDT in over 660 stores in the US.
This move marks a new milestone for Bealls but also shows how traditional retail is embracing digital money. With 65 million Americans owning cryptocurrency, demand for real-life use cases is rising. This supports crypto while adding to its legitimacy.
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