Bitcoin And Precious Metals May Be Disconnecting Trends

This daily Bitcoin chart highlights the current Excess Phase process (currently trending in Phase #3 waiting for the breakdown in trend to complete Phase #4). This breakdown event will likely prompt Bitcoin traders to wait for a new bottom to set up in the future, and to possibly use their capital to move into the Reddit-focused short-squeeze plays.


Additionally, the following monthly silver futures chart highlights the extended Cup-And-Handle setup that appears to suggest a move to $45 (or higher) is very likely. As the Reddit group targets SLV, AG, and SILJ, it is very likely that spot prices will climb rapidly as metals investors buy as much physical metal as possible.

This is a “shotgun” style of a short-squeeze. It will likely result in the entire precious metals sector moving higher in some form, whereas the leading ETFs, miners, and spot metals will drive the trends.

The disconnect happens when Bitcoin stalls or breaks down and precious metals rally. Traders are very likely to take their Bitcoin gains and shift into precious metals as this breakout trend extends. If you were lucky enough to have physical silver or gold already, sit back and enjoy the ride. If not, you will likely join the hundreds of thousands of Reddit and other traders that attempt to jump into this new silver trend on Monday.

The one thing everyone needs to consider as these events play out is liquidity. The process being executed by the Reddit group attempts to limit liquidity for short-sellers. This process creates a potential “gamma squeeze."

If this were to happen in silver, or any other symbols, we may see very strange prices levels over the next few weeks or so. Remember the Flash-Crash and how that played out? This is the same type of event, except it traps the shorts forcing prices to skyrocket instead of collapsing.

Major sectors, ETFs, and hundreds of stock symbols may get shoved around over the next few days or weeks. This means we’ll likely see increased volatility. Over time, things will settle down and we’ll be able to adjust to new trend/trade setups. Right now, we need to prepare for a very volatile period in the markets with the potential for a flash-crash or flash-rally taking place.

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