Certified Market Technician (CMT) Tony “The Bull” Severino argues that Bitcoin’s most reliable macro measure — the copper-to-gold ratio — has broken character at the moment the market typically enters a parabolic phase, leaving the post-halving script in disarray and altcoins without their usual rotation.
Why is the copper/gold ratio crucial to Bitcoin?
In 16 minutes video In the analysis, published on November 10, Severino identifies the copper/gold ratio as an “indicator of growth versus fear,” where copper strength signals expansion, rising returns and risk appetite, while gold outperformance signals recession risks, lower returns and risk-off behaviour.
“When gold performs better than copper, it usually means an economic slowdown (and) fears of a general recession,” he said, adding that industrial demand for copper stabilizes the ratio in the business cycle. The point: The cyclical shift in ratio that historically coincides with Bitcoin’s vertical phase never arrived. “They say the riskiest thing they can say in investing is, ‘This time is different.’ Well, this time is different,” Severino said. “The business cycle based on the copper-to-gold ratio has not risen again.”
Severino asserts that the four-year halving tradition is at best incomplete and at worst misattributed. He overlaid the previous halving dates with a Fisher shift signal on the copper/gold ratio, and noted that the real shift was entirely historical, rather than supply-driven. “I didn’t really think it was the half,” he said. “On the same halving date, the Nasdaq market rally began (…) The Bitcoin halving will not really have any impact on technology stocks.” In its construction, the halving coincided with, rather than being caused by, a rise in the ratio, and the risk drive that typically pushes Bitcoin beyond previous highs to the eventual parabolic leg.
Related reading
This cycle diverged. After producing a brief “higher high” in the ratio — the first since around 2010 — copper/gold failed to create a higher low and instead recorded “another lower low,” marking, in Severino’s words, the lowest reading in about 15 years on his chart — “almost since the Great Recession.”
The historically overturned Fisher transformation to confirm the risk window has never achieved full follow-through. “It was supposed to send Bitcoin into the final leg of its parabolic rally (…) and we didn’t reach the parabolic rally after passing its all-time high. We’re just kind of zigzagging sideways.”
Has the Bitcoin cycle reached the top?
In terms of timing, failure is important. Severino measures approximately a year between the ratio trigger signal and the Bitcoin cycle high in previous episodes. By that measure, “we really should have been at the top” already, or if we hold on to a March breakout above the 2021 high, we will at least be entering a risk-off window. But without the ultimate driver of risk appetite, the course becomes unclear. “Because we haven’t taken the full risk, I don’t know where the risk-off signal is,” he said.
Related reading
The implications extend to altcoins and Bitcoin dominance. Historically, the “risk appetite” phase for the green ratio coincided with the “swing season”, but this time this setup did not materialize at all. “Normally you get your swing season at these green spots (…) we didn’t get it here,” Severino said, noting that Bitcoin’s dominance has major support on higher time frame views. It also highlights the “very strong negative correlation” between Bitcoin and the copper/gold ratio at present; In past cycles, the correlation drift toward zero has tended to coincide with the season of change. “None of the conditions for altcoin season do not appear to be here based on previous economic signals,” he added.
Severino stopped short of the inevitable call. The structure of the ratio trend is ambiguous – a single failure to break out of a long downtrend does not lead to an uptrend – and the Fisher signal can still shift. But until that happens, he says, macroeconomics says caution.
“We are still on the fear side of this ratio. We need to remain defensive and we must be risk averse. When this starts to come back up, we can consider being a risk-upside asset again.” He points out that this ambiguity is precisely why Bitcoin’s post-ATH drift challenges the outdated four-year narrative: “It hasn’t done the same thing as it did in the past (…) We’re different. It’s really different this time.”
At press time, Bitcoin was trading at $104,486.
Featured image created with DALL.E, a chart from TradingView.com
The post Most Reliable Bitcoin Boom Indicator Just Went Off-Script: Expert first appeared on Investorempires.com.
