Bitcoin (BTC) appears to be on the verge of experiencing a significant price correction in the coming days, as indicated by a fractal that compares its performance to that of gold. To provide some context, the leading cryptocurrency has surged by more than 132% in 2024, including a 47% rally following Donald Trump’s election victory in November.
The possibility of a sharp correction in Bitcoin’s price is highlighted by veteran analyst Peter Brandt, who points to its performance against gold futures. The Bitcoin-to-Gold ratio (BTCUSD/GC1!) has entered a key resistance zone between 34 and 37, a level historically associated with local market tops. Furthermore, the ratio’s weekly relative strength index (RSI) has surpassed the overbought threshold of 70, indicating potential overextension.
This pattern has previously coincided with significant price declines in Bitcoin’s USD pair (BTC/USD). For instance, in March 2024, when the Bitcoin-to-Gold ratio reached the 34-37 resistance area and had an overbought RSI, the BTC/USD pair peaked near $74,000, followed by a 33% correction. A similar 75% decline in BTC/USD occurred during the 2021-2022 period, following Bitcoin’s all-time high of $69,000 in November 2021.
This peak in price aligned with the Bitcoin-to-Gold ratio reaching its critical resistance zone between 34 and 37, underscoring the significance of this area as a historical indicator of bearish reversals. An overbought RSI on the weekly chart of the Bitcoin-to-Gold ratio has primarily signaled corrections in BTC/USD prior to 2021. For example, the peaks in BTC/USD in December 2017 and June 2019 coincided with the weekly RSI of the ratio entering overbought territory, despite the ratio itself being much lower at 15 and 10, respectively.
BTC/USD experienced declines of over 85% and 72% after reaching its peaks in December 2017 and June 2019, respectively. Overall, this fractal reflects traders’ tendency to view Bitcoin as a high-risk, speculative asset, while considering gold as a safer hedge during bear markets. As Bitcoin becomes overvalued relative to gold, investors seem to rebalance their portfolios by reducing their exposure to Bitcoin, leading to sharp price pullbacks.
The question remains: how low can the Bitcoin price go? Previous corrections from local weekly tops have seen Bitcoin test the 50-week exponential moving average (50-week EMA) as the primary downside target. The current scenario suggests the possibility of a similar correction in early 2025. For example, Bitcoin is currently testing the 1.618 Fibonacci retracement level of around $102,000 as resistance, showing signs of a pullback.
If the correction occurs, the possibility of BTC/USD reaching $65,000-69,000 aligns with its 50-week EMA and 1.00 Fibonacci line, resulting in a correction of around 30-35% by March 2025. On the other hand, a breakout above the $102,000 resistance level could set Bitcoin up for a rally towards $150,000, in line with several bullish BTC predictions.
It should be noted that this article does not provide investment advice or recommendations. Every investment and trading decision carries risks, and readers should conduct their own research before making any decisions.