Bitcoin And Precious Metals May Be Disconnecting Trends

Bitcoin, Blockchain, Crypto, Cryptocurrency, Coin
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In the recent past, quite a bit of attention was focused on Bitcoin (BITCOMP) throughout the October 2020 to January 2021 rally phase. It was an incredible rally of over 400%, and many analysts have highlighted the alignment of Bitcoin to precious metals prior to the breakout rally in Bitcoin. The renewed interest in cryptos in October broke this alignment, as cryptos rallied while precious metals stayed mostly flat or negative.

My research team and I have written on How To Spot The End Of An Excess Phase near the end of November 2020, which spotlighted Bitcoin. We have further identified a broad market cycle phase which has shifted from appreciation to depreciation, taking place in late 2018/early 2019, and it is believed that the rally in Bitcoin was driven by this excess phase enthusiasm.

The Reddit group that has disrupted trading over the past few months has opened fresh wounds across many hedge funds and ETFs. The weighting of technology-heavy ETFs has shifted, and capital is shifting away from risks much faster than anyone expected. This WallStreetBets Reddit group has shown the strength and fortitude to execute their group buying across various heavily shorted symbols, and the rumor is that they are targeting silver.

SHIFTING CAPITAL MAY INCREASE VOLATILITY OF TRENDS IN BITCOIN/METALS

The process of reducing liquidity in the markets, by buying and holding shares while levering positions with call options, has created a short-squeeze of epic proportions – we’ve only seen this a few times in history. What it means for traders is that the next few weeks could be very volatile, dangerous, and/or opportunistic.

If capital moves away from cryptos as this Reddit plan is executed, a breakdown of the support channel is very likely – targeting $25,000 or lower. Additionally, precious metals, particularly silver and silver-related shares, are likely to experience a potentially epic short-squeeze event. This event may send silver skyrocketing above $45 per share very quickly.

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