The Bitcoin to gold ratio is displaying signs of recovery after an extended period of decline. Currently, it is trading around 21.76, and technical analysts are observing a possible double bottom formation near the 21.7 level. This pattern could indicate a reversal in momentum for this closely monitored cross-asset ratio.
After a significant selloff that saw the ratio decline from the 28-30 range earlier this year, recent price movements suggest that this downtrend may be losing strength. The current technical picture reveals that BTC relative to gold has struggled to regain its position above key moving averages, with both the 50-day and 200-day lines still trending downward, acting as resistance levels.
Moreover, the volume profile indicates a substantial cluster of previous trading activity between 28 and 32, which was once a battleground zone for traders. The current price, resting near 21.7, highlights the distance this ratio has fallen while attempting to stabilize.
Presently, traders are noticing candles forming near recent lows, which signifies the development of the double bottom. However, caution prevails; for this pattern to materialize into a genuine reversal, BTC priced in gold must break through the declining moving averages and ascend into the resistance zone starting around 27.5.
The Relative Strength Index (RSI) currently sits at a low level, reflecting the extended weakness observed in this ratio. Nonetheless, this low RSI also indicates potential for a bounce if buying pressure increases. This marks the first serious attempt at stabilization since the middle of summer.
Understanding the importance of this development is crucial. If Bitcoin can maintain support at this level and initiate a climb, it could signify a pivotal shift in its performance relative to gold. A confirmed double bottom typically suggests that the prevailing trend is exhausted and ready for a potential reversal. Thus, traders will closely monitor whether BTC can defend this support base and begin pushing into higher resistance areas, which would signal a significant change in the risk-on versus safe-haven dynamic between these two assets.
