Bitcoin (BTC) faced a 4.9% correction in the four days following the failure to break the $28,000 resistance on Oct. 8, and derivatives metrics show fear is dominating sentiment in the market, but will it be enough to shake Bitcoin price from its current range?
Looking at the bigger picture, Bitcoin is holding up admirably, especially when compared to gold, which has fallen by 5% since June, and Treasury Inflation-Protected bonds (TIP), which have seen a 4.2% drop during the same period. Merely maintaining its position at $27,700, Bitcoin has outperformed two of the most secure assets in traditional finance.
Given Bitcoin’s price rejection at $28,000 on Oct. 8, investors should analyze BTC derivatives metrics to determine whether bears are indeed in control.
Bitcoin/USD vs. inflation-protected TIP ETF vs. Gold. Source: TradingView
Treasury Inflation-Protected Securities are U.S. government bonds designed to safeguard against inflation. Consequently, the ETF’s value tends to rise with increasing inflation since the bond principal and interest payments adjust to inflation, preserving the purchasing power for investors.
$27,600 Bitcoin is not necessarily a bad thing
Regardless of how you frame this historic achievement, Bitcoin enthusiasts may not be entirely satisfied with its current $520 billion market capitalization, even though it surpasses global payment processor Visa’s ($493 billion) and Exxon Mobil’s ($428 billion) market capitalizations. This bullish expectation is partly based on Bitcoin’s previous all-time high of $1.3 trillion in November 2021.
It’s important to note that the DXY index, which measures the U.S. dollar against a basket of foreign currencies, including the euro, Swiss Franc and British Pound, is nearing its highest level in 10 months. This indicates a strong vote of confidence in the resilience of the U.S. economy, at least in relative terms. This alone should be enough to justify reduced interest in alternative hedge instruments like Bitcoin.
Some may argue that the 3% gains in the S&P 500 index since June contradict the idea of investors seeking cash positions. However, the top 25…