The charts indicate it’s time to bet on bitcoin and short gold

In the past week, the crypto market saw some big moves in both directions keeping the crypto community on its toes. Bitcoin hit a new all-time high of $108,250 and other major coins such as  have traded near all-time highs fueled by the anticipation of a 25 basis points rate cut by the Fed. Since the time BTC hit an all-time high, the market dynamics have changed quite a bit, taking the crypto down to $3.2 trillion. Despite the dip, key developments in the establishment of Bitcoin reserve, Ripple stable coin and others are keeping the market sentiment strong with buying interest emerging at the lower levels. As we move to the last week of the year, let’s take a look at how the previous week changed the crypto dynamics.

The launch of Bitcoin ETFs has proven to be the best thing that happened to the crypto market yet. A report from K33 Research reveals that U.S -listed bitcoin ETFs have surpassed U.S.-listed Gold ETFs in terms of assets under management (AUM), including leveraged products such as futures-based ETFs. Since its launch in January, Bitcoin ETFs have seen over $129.25 billion in AUM edging out Gold ETF AUM at $128.88 billion that have been trading for over 20 years. This number shows the resilience of Bitcoin with huge buying interest from institutional investors. While comparing spot-based products exclusively, Gold remains slightly ahead, but the gap is closing soon and Bitcoin ETFs could surpass Gold ETFs in just spot ETFs as well in the next few weeks.

One of the major events of the week that changed the direction of the market was the Fed’s meeting. While the Feds cut the interest rate by the expected 25 basis points, it also adjusted its 2025 rate cut outlook from three to two. A weak inflation forecast from the largest economy led to a sell-off across all global markets including the crypto markets. The US stock market saw over $1.5 trillion in liquidation while the Indian markets also fell by over 4.5%. On the same lines, even the crypto market saw over $1 billion in liquidation, taking down Bitcoin’s price by 5.5%. Federal Reserve Chair Jerome Powell’s hawkish remarks on the Federal Reserve’s stance against owning Bitcoin further added to the selling pressure.

Moving forward into the last week of the year, we might see some volatility given that we are on a cooling-off period between bull runs. The market needs to build some momentum for the potential rally after Trump assumes office. Such cooling-off periods are crucial when having a prolonged bull market like the one we are having now. Adding to this is the Christmas sell-off from institutions ahead of the new year. Bitcoin might test key support levels before bouncing back. While such periods provide investors with attractive entry points and Dollar cost averaging, traders are advised to maintain strict stop loss to minimize risks.

Gold is a marvellously flexible precious metal, commodity or form of money adaptable to different cultures, currencies and ideologies. These are qualities it has displayed over centuries and which it is demonstrating again now despite challenges from upstart cryptocurrencies.

The fact that the price of gold has soared by more than 30 per cent to a record of more than US$2,600 an ounce this year has received far less publicity than the fact the always volatile price of bitcoin achieved a record value of . Yet gold’s rise is by far the more significant of the two developments.

The reason is that is exerting much or most of the upwards pressure on the gold price. As the Official Monetary and Financial Institutions Forum (OMFIF) noted in a recent joint report with the Commodity Discovery Fund and the trading platform Gold Republic, “Gold is now back in vogue among central banks worldwide as the ultimate safe asset”.

This fact detracts from the notion promoted by cryptocurrency enthusiasts that these institutions are actively diversifying their official reserve holdings into bitcoin and other cryptocurrencies.

In what the OMFIF report describes as the latest stage in gold reserve trends during the past 200 years, central banks are reverting to a historical pattern and confirming gold’s role as  The war provoked by Russia’s invasion of Ukraine in February 2022 has, the report suggests, propelled a “sharp and apparently self-feeding increase” in the number of central banks purchasing gold.

This trend has spread well beyond China, Russia and other countries interested in to the US dollar-based international monetary order. Central banks in the Czech Republic, Hungary, Ireland, Poland, Qatar and Singapore have joined traditional buyers such as Turkey and India in ramping up gold purchases amid a growing desire for asset diversification and concerns about weakening of the dollar’s longer-term international role.

The very idea that central banks, which often attract people of considerable intellectual ability and professional experience into their ranks, would somehow be swayed from gold to pursuing cryptocurrencies as an official reserve asset on a major scale in such a short time seems naive. The USA seems oblivious to this fact, however, with US president-elect Donald Trump being an advocate of cryptocurrencies – which is odd given that the US is among the world’s biggest holders of official gold reserves.

The motive of those pushing this notion appears to be to devalue gold and raise bitcoin’s value. These proponents should remember that gold has been around for a very long time. Cryptocurrencies, by contrast, first appeared just 15 years ago .

The motive of those pushing this notion appears to be to devalue gold and raise bitcoin’s value. These proponents should remember that gold has been around for a very long time. Cryptocurrencies, by contrast, first appeared just 15 years ago .

During its long history of use by humans as a decoration, currency and store of value, gold has shown itself to be a remarkable hedge against inflation and to be immutable, in the sense of being virtually indestructible. Other precious metals possess some of these qualities, but not to the same extent as gold. Bitcoin possesses none of them.

Yet it is not these qualities alone that account for gold’s rapidly increasing appeal, especially where many central banks are concerned. Rather, it is the weaponising of the US dollar, which has been the world’s principal transaction since the pound sterling abdicated that responsibility around the end of World War II.

Another motivation for the new-found popularity of gold among central European central banks has been growing recognition of gold’s usefulness as a balance sheet protection instrument, according to the OMFIF report in a country’s official foreign exchange reserves enhances that country’s international image.

Yet another factor is anticipation of possible radical measures by Trump, who has floated the idea that the US could use bitcoin to pay off at least part of its US$35 trillion The thinking among central bankers appears to be that given an already-fraught international environment and the return to power of a US president whose hallmark is unpredictability, gold could be a beneficiary of any financial turbulence that ensues.

Mohamed El-Erian, an economist and former International Monetary Fund official, has suggested that the gold purchases by central banks indicate a desire for a shift away from reserves dominated by the US dollar. He argues that the gold-buying trend is driven by concerns over US management of the global order