The reason Bitcoin is approaching the buy zone

CNBC contributor and founder of The Bear Traps Report, an independent weekly investment research publication focused on global political and systemic risk, Lawrence McDonald, notice that one bitcoin is now equivalent to 20 ounces of gold, well below the peak of 37 ounces recorded in August.

“The XBT to XAU ratio of 38x is now close to 20x, close to the buy zone. Sell ​​almost 40x, buy almost 15x, works”.

BTC to Gold Ratio | Source: Twitter

McDonald believes Bitcoin will be in a buy zone when the XBT/XAU ratio hits 15 ounces.

At the moment, the weekly chart’s Relative Strength Indicator (RSI) is also showing oversold conditions (between 30 and 40) as the bitcoin price has fallen below $40,000.

BTC price chart | Source: Trade View

For now, bitcoin slipped below $37,000 to continue its bearish streak.

Galaxy Digital CEO Mike Novogratz recently tweeted that cryptocurrencies will remain under pressure as they continue to trade alongside the US stock market. The correlation between Nasdaq and Bitcoin recently hit an all-time high (ATH).

Brave New Coin’s Josh Olszewicz tweeted that Bitcoin has entered the Ichimoku Cloud’s weekly frame for the first time since the start of the Covid-19 pandemic, which could be a worrying sign for bulls.

“Two difficulties for the Bulls.

1. Infiltrate the Ichimoku Cloud weekly frame for the first time since the pandemic began.
2. An active head and shoulders (H&S) pattern is likely to come into play and potentially slide towards the key annual S1 level of $26,000.”

Fairlead Strategies Founder and Managing Partner Katie Stockton recently noted that $37,361 will serve as key support for Bitcoin. If it breaks below the above price, a further drop to $30,000 is likely.

Stockton believes that bitcoin could break below support just before the rally begins. Failure to regain momentum does not bode well for altcoins.

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