Live Metal Prices / oz
Gold:
1814.43 USD
Silver:
25.47 USD
Platinum:
1045.00 USD
Palladium:
2664.00 USD
Rhodium:
20900.08 USD

Can the Recent Bitcoin Dip Boost the Gold Price?

In the cryptocurrency realm there are now new competitors for gold. Like gold, Bitcoin appeals to individuals who see shortcoming in fiat currencies that will result in inflation. They also see flaws in government and its respective branches. Bitcoin continues to be an amazing story, however, its creation hasn't negatively impacted demand for gold, which also sits at all time highs.

Recently a surge in gold prices saw the yello metal surpass $1,800 an ounce in the last two weeks of April 2021. If this level is breached, it could help gold reach $1,900 an ounce again.

Analysts are optimistic about gold prices in the near future. The positive expectations are deeply dependent on two factors — the recent dip in Bitcoin's price and U.S. President Joe Biden's plan to nearly double the capital gains tax rate for wealthy Americans.

Bitcoin fell by more than 23% to $49,700 at midday on April 23, losing over $200 billion in market capitalization, after reaching an all-time high of $64,800 on April 14. On April 23, June Comex gold futures were trading at $1,776.90, flat on the week, hence the inverse impact of the dip in Bitcoin on the gold price.

Bitcoin selloff

The popular cryptocurrency was down more than 9% on Friday, heading for its worst week in almost two months. This current negative volatility in Bitcoin could prove beneficial to gold, which has lost some popularity to Bitcoin.

The Bitcoin chart looks somewhat negative. Bitcoin has been one reason that gold prices haven't gone higher. Some investors of gold are also investors of Bitcoin. If Bitcoin remains down, the next push higher in gold could see more support from investors, and the valuable metal could regain some of its popularity back from Bitcoin.

Bitcoin's $48,000 level is important. It is possible that bitcoin prices could slide down to $43,000, which is its 200-day moving average. The cryptocurrency hasn't traded below $45,000 for several months.

U.S. President Joe Biden plans to almost double the capital gains tax rate for rich Americans. Biden's proposition implies that the government tax rates for certain investors could be as high as 43.4%. On the off chance that the capital gains tax makes the U.S. a less favourable destination, there will be less motivation for individuals to hold cash in U.S. dollars. That could also hurt the purchasing power of the dollar. Investors will look for other options for investment. With the recent fall in Bitcoin prices, gold may become the better option.