06.12.202117:59 Forex Analysis & Reviews: Investors questioned Bitcoin as an alternative to gold: how it relates to the bankruptcy of Evergrande and the SP500 index

During the upward trend in autumn, speculation swirled around Bitcoin that the asset could not compete with gold. And analyzing the last collapse, there are more and more such thoughts.

Over the past week, a series of negative factors have significantly influenced the bitcoin quotes and the cryptocurrency market. It all started with the panic reaction of investors to the emergence of a new strain of coronavirus, and subsequently, the overheated bitcoin market received another blow in the form of another piece of news about the bankruptcy of the Chinese developer Evergrande. As a result, Bitcoin fell by more than 30% and pulled the entire market with it.

In addition to speculations about the fate of the bull market, facts have emerged that indicate that investors have questioned Bitcoin as an alternative to gold. The bankruptcy of the Chinese developer was announced on Saturday, when most of the classic markets are not functioning, as a result of which the main blow fell on the cryptocurrency and bitcoin market. I don't think this was the key factor behind the collapse, since the market was already overheated enough.

However, it cannot be denied that investors used the cryptocurrency market to get the necessary liquidity, and with the beginning of the new trading week, invest assets in less risky financial instruments. Taking this into account, we should expect an upward movement of precious metals and government bonds of developed countries.

Another reason to believe that bitcoin is no longer seen as an alternative to gold is the increased correlation with the S&P 500 index. This suggests that the institutional audience of the cryptocurrency considers the asset as a high-risk and high-yield part of the portfolio, and not an optimizing means of hedging risks. As of December 6, we see a corresponding drop in the Bitcoin and S&P 500 charts.

At the same time, it is likely that the outflow of liquidity from the cryptocurrency market was made because the default was announced over the weekend. And in the end, the current situation aggravated the correction of cryptocurrencies, but was not a consequence of the logic of investors that BTC is not an alternative to gold.

This scenario is supported by the correlation with gold during the recent fall, which indicates a drop in demand for precious metals and cryptocurrency. The current trend could change if gold and other metals start to rally in the coming days. If this does not happen, then liquidity should be sought in government bonds of developed countries.

Bitcoin continues to consolidate in the $46,500-$48,000 region but may expand its fluctuation range to $50,000. In general, the situation around the cryptocurrency is still precarious, due to the fact that the price entered the area below $45,000 and traded there for some time. The breakdown of the $45,000 line indicates a possible retest and a decline to the $ 40k- $ 45k area. This is fraught with a new sale and a full-fledged trend change.

Based on the Fibonacci levels, Bitcoin has room to move up, above $50,000, to the 0.618 Fibo level, which passes at the $51,200 mark. Now the main task of the coin is to stabilize the price and gradually launch the period of consolidation and accumulatio