Commodities: A Massive Rally That Changes Everything
The commodities market is boiling over. After gold and silver recently tested new highs, it’s now black gold’s turn to embark on a marked upward trend. This synchronized movement is no coincidence: it often signals institutional investors hedging against geopolitical and monetary uncertainty.
However, for the crypto market, this dynamic is a double-edged sword. While Bitcoin has sometimes played the role of digital gold, it remains today strongly correlated with risk-on assets. Seeing oil soar is generally a warning signal for tech assets and cryptocurrencies, as it drains available liquidity toward more defensive sectors.
Why Is Rising Oil a Bearish Signal for Bitcoin?
The mechanics are simple but brutal for the bulls. Expensive oil directly fuels inflation (CPI). If inflation picks up again, the Federal Reserve (Fed) will have its hands tied and won’t be able to cut its benchmark rates as quickly as the market had hoped. Yet Bitcoin and altcoins thrive on cheap liquidity and low rates.
If the Fed is forced to toughen its stance or postpone its rate cuts (pivot), the dollar (DXY) is likely to strengthen. Historically, a strong DXY exerts immediate selling pressure on BTC. Instead of the hoped-for bull run, we could witness a prolonged consolidation phase, or even a severe correction if bond yields follow oil’s trend.
Should We Fear a Crash or Take Advantage of the Dip?
The crypto market is showing signs of nervousness in the face of these macroeconomic indicators. BTC is currently testing critical support levels and volatility could intensify in the coming days. Most notably, it failed to conquer $90,000 and its bullish trendline. All of this after the FOMC, which has generally marked a local top for several months now.
This potential retracement could continue down to $50,000 in the coming months. As long as $91,000 is not reclaimed, the bearish trend will intensify. And for now, gold doesn’t seem ready to stop.
Gold could reach $10,000 within 6 to 12 months, while some forecast silver at over $500. According to Finneko, this trend is historic and “a paradigm shift” is taking place. In his view, precious metals will be the big winners:
“When a pillar of global financing becomes unstable, leverage tends to contract and two things happen simultaneously: forced selling on certain assets and forced buying of protection on others. Historically, precious metals are often among the beneficiaries.”
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