Bitcoin (BTC) is struggling to gather upside traction on Tuesday despite a rally to multi-year highs for gold.

The biggest cryptocurrency by market value, often touted as “digital gold,” is trading near $6,900 at press time,  representing a marginal gain on the day, according to CoinDesk’s Bitcoin Price Index.

Prices jumped from $6,800 to $6,930 early Tuesday after better-than-expected China trade data for March pushed S&P 500 futures higher. The upward momentum, however, has stalled even though the futures are holding gains.

Meanwhile, an ounce of gold is changing hands near $1,717, up 0.5 percent on the day, having hit a 7.5-year high of $1,730 during the Asian trading hours. The yellow metal is now up 9 percent on a month-to-date basis, while bitcoin is lagging with just a 5 percent gain.

Gold seems to be benefiting from the U.S. Federal Reserve’s recent monetary stimulus, which has pushed its balance sheet above $6 trillion for the first time on record.

Also read: Why the US’ $2 Trillion Stimulus, Unlimited QE Will Expose the Monetary System’s Flaws

The expansion is likely to continue as the central bank’s ongoing asset purchase program is open-ended, meaning it will keep buying bonds as long as the economy needs support in battling downside pressures emanating from the coronavirus outbreak. Historically, the Fed’s balance sheet expansion has boded well for gold’s price.

Further, uncertainty around the short- and long-term economic impacts of the virus pandemic is forcing investors to pour money into safe havens like gold and U.S. Treasurys, according to the World Gold Council.

Most crypto market analysts are convinced the factors, which are pushing gold higher, are bullish for bitcoin. Essentially, the cryptocurrency is expected to take up the role of a safe-haven asset.

However, Frank Shostak, an associated scholar of the Mises Institute and chief economist and director of AAS Economics, thinks investors would prefer holding cash or investing in treasuries. “I am skeptical that in the time of a severe recession, people would want to deal with an electronic type of entity,” said Shostak.

It’s worth noting that bitcoin has moved pretty much in line with the equity markets, or risk assets, right from the beginning of the coronavirus crisis.

That makes it vulnerable to another round of selling in equities, which may be seen as a raft of U.S. corporate earnings reports due this week is expected to highlight the coronavirus-led downturn in the world’s largest economy.

Short-term technical charts indicate the cryptocurrency is
lacking a clear directional bias.

Daily chart

download-7-30

Bitcoin created a long-tailed candle on Monday, indicating dip demand near $6,600 and weakening the immediate bearish view put forward by a rising wedge breakdown seen on Friday.

The cryptocurrency also encountered bearish pressures near $7,200 on weekend, as indicated by the long upper shadow attached to Sunday’s candle.  

The outlook, therefore, will remain neutral as long as prices are trapped in the $6,600–$7,200 range. A break above the top end could bring in stronger chart-driven buying and yield a rally toward $7,800. Alternatively, a move below the lower end of the trading range would open the doors to $7,100.

Disclosure: The author currently holds no cryptocurrencies.

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