Bitcoin rises above $81,000 with gold, but analysts cite other factors
Bitcoin rebounds above $81,000 as gold jumps
Bitcoin rose above $81,000 on Nov. 4 after rebounding from about $75,600. Gold futures rose 3.4% to $4,061.10, their biggest daily gain in three months.
The US dollar weakened as investors reacted to the Democrats' win in the US midterm elections. The shared rise brought back talk of the debasement trade, which means buying scarce assets like Bitcoin and gold to protect against currency weakness.
Analysts say the move is not proof of that trade. Other market moves point to better overall sentiment.
Three points to note
- Bitcoin and gold rose together, while stocks also rose and Treasury yields fell.
- About $378 million in short positions, bets on falling prices, were liquidated in one hour.
- US spot Bitcoin ETFs took in $74.6 million on Nov. 4 after $1.16 billion of outflows in the prior three sessions.
Why the joint rise revived the debasement trade
The idea that Bitcoin behaves more like gold has grown in recent months, the source reported. In August, Grayscale reported Bitcoin's 90-day correlation with gold rose above 0.50 from almost zero earlier in the year. Its correlation with the Nasdaq-100 fell from more than 0.60 to about 0.33.
Bitwise found the Bitcoin-gold link was its strongest since 2020. That year, large fiscal and monetary stimulus raised concern about the purchasing power of traditional currencies.
The Congressional Budget Office projects the US federal deficit will reach $1.9 trillion in 2026. It projects $3.1 trillion by 2036, with publicly held debt at 120% of GDP.
Why lower yields and election relief may also explain it
The S&P 500 rose 1.6% and the Dow rose 3% on the same day. The 10-year Treasury yield fell from about 4.95% to 4.89%. Market expectations for inflation over the next year fell from about 2.4% to 2.1%.
Lower yields can make gold more attractive because gold pays no interest. Easier financial conditions can also support riskier assets such as Bitcoin.
Investors also welcomed the prospect of less political uncertainty. Divided government could limit additional federal spending, the source said. James Butterfill of CoinShares suggested Bitcoin had already priced in much of the Democratic victory, leaving room for a rise once uncertainty faded.
Short squeeze and ETF flows add doubt to fresh demand
CoinGlass data showed about $378 million in bearish crypto positions were liquidated within one hour as prices rose. Short positions made up about 81% of liquidations. Forced buying by those traders can speed up a rise.
Bitfinex's Nov. 4 analysis found recent Bitcoin recoveries were driven largely by short covering. It found limited evidence of aggressive buying in the spot market, where assets are bought directly.
US spot Bitcoin ETFs, funds traded on a stock exchange that hold Bitcoin, had about $1.16 billion in withdrawals over the three sessions before the rebound. That was their largest such outflow since late June. On Nov. 4 they took in $74.6 million, according to Farside Investors data. Fidelity's FBTC took in $236.7 million, while BlackRock's IBIT lost $201.2 million.
Glassnode reported only about 38% of Bitcoin held by short-term investors was profitable. That compares with at least 97.5% in early October.
Price levels analysts are watching
Glassnode identified $77,700 as the average cost basis of active investors. It identified additional support around $75,700. It said a sustained decline below $73,000 would threaten the recovery that began in August.
On the upside, Bitfinex identified $84,000 to $85,500 as an area where holders could sell to recover their initial investments. Glassnode flagged a concentration of potential short liquidations near $87,000.
Holding $75,700 to $77,700 with sustained ETF inflows would strengthen the debasement case, the source said. That has not yet been shown.
Friday US jobs report is next test
Bitcoin's next challenge comes from Friday's US employment report, the source said. A stronger-than-expected report could put upward pressure on Treasury yields. That could test the conditions that helped Bitcoin and gold recover.
Sources
Newisty Editorial Team covers technology, cryptocurrency, digital products, online platforms, developer tools and the wider digital economy. Our content is researched from official sources, company announcements, public documentation, market data and other primary or reputable sources. Articles are reviewed and edited before publication for clarity, accuracy and useful context.
Related Posts
Anthropic says Claude traced P-256 curve seed to a 1997 timestamp
Former CFTC Chair Says Crypto Regulation Already Within Reach
