BTC heading for a ‘double bubble’ in 2021 but Bitcoin volatility could boost gold prices

• Bitcoin is poised for a strong end to the year after signalling a ‘double bubble’ according to the most recent on-chaindata.
• With volatility heightened, this could drive investors towards gold which has remained relatively stable.

All attention is currently on the world’s largest cryptocurrency Bitcoin (BTC) which had a stellar run to $47,000 earlier this week. However, it seems that bitcoin has once again entered the price volatility stage. At press time, Bitcoin is trading 1.7 percent down at $44,430 and has a market cap of $836 billion.

Jake Klein, executive chairman of the gold mining firm Evolution Mining notes that this volatility in the BTC price can push investors towards Gold. While the BTC price has advanced significantly so far in 2021, Gold prices have remained much steady with a muted response.

Speaking to CNBC’s Squawk Box Asia on Thursday, August 19, Klein said: “I think that the volatility in the crypto space is going to ultimately lead to people coming back to gold”.

The gold price has been on the decline over the last week and a few analysts expect it to fall further. But Hedge fund manager David Neuhauser believes that this provides investors with a “massive (gold) buying opportunity” to investors.

The mining firm chairman Jake Klein doesn’t necessarily see Bitcoin as a competition to gold. He believes that both the asset class can co-exist together. Klein believes that Bitcoin has still a long way to go. Besides, it should prove the “longevity and security” just as gold has done for the last 70 years.

Even top investing gurus still prefer Gold to Bitcoin. Hedge Fund Manager and billionaire Ray Dali recently said: “If you put a gun to my head, and you said, I can only have one, I would choose gold” However he still holds an undisclosed amount of BTC.

Bitcoin (BTC) could see double bubble

As per the latest on-chain data, Bitcoin is currently seeing a ‘double bubble’ and can see two price tops this year itself in 2021. On Wednesday, August 18, Charles Edwards, CEO of investment firm Capriole, noted that a similar situation happened back in 2013.

Edwards further points out an important metric of unrealized profit and loss (U&PL). He recently stated:

New evidence for a Bitcoin double bubble. In prior cycle tops, bounces were never able to hold unrealized profit and loss above 0.5. Only the 2013 double bubble and today have achieved this.

If we look at the charts of the Bitcoin double bubble carefully, it shows a two-phase price peak this year. The Bitcoin Bubble Index touched an all-time high of 119 earlier this year on April 19, 2020. It was the same time when Bitcoin was trading at its all-time high of $64,000. Currently, the Bitcoin bubble Index is at 110 levels when BTC is trading at $44,500.

On the other hand, some other analysts have also started giving higher price targets for Bitcoin (BTC) this year. The author of the stock-to-flow model PlanB stated that the BTC price can touch $100K and the current price is following his chart predictions.