Data shows Bitcoin has been becoming increasingly correlated with Gold, a potential sign that the digital Gold narrative is making a return.
Bitcoin Correlation With Gold Has Risen To 0.75 Recently
In a new on X, the market intelligence platform IntoTheBlock discussed the latest trend in Bitcoin’s Correlation to Gold. The “Correlation” here is a metric that tracks how closely related the prices of two given assets are. In the current case, of course, the assets are BTC and Gold.
When the value of this metric is positive, it means BTC is reacting to movements in the Gold price by moving in the same direction. The closer is the indicator to the 1 mark, the stronger is this relationship.
On the other hand, the metric being under zero suggests that, although there is some correlation present, it’s a negative one. In other words, the two assets are moving in the opposite direction to each other. The -1 level plays the role of the extreme in this case. The Correlation can also assume a value exactly equal to zero, indicating that there is no relationship between the prices of the assets whatsoever. In statistics, the variables satisfying this condition are said to be independent.
Now, here is a chart that shows the trend in the Bitcoin Correlation to Gold since the start of the year 2024:
As displayed in the above graph, the Bitcoin Correlation to Gold had slumped to the lowest point for the year in July, but since then, the metric has been steadily moving up. The indicator now has a value of 0.75, which suggests there is a notable positive relationship between the assets. From the chart, it’s apparent that this is the highest that the metric has been since March.
“Bitcoin’s rising correlation over the past months aligns with investors’ recession fears and lack of confidence in the dollar,” notes the analytics firm. “This flight to safety highlights Bitcoin’s evolving role in macroeconomic hedging.”
The Correlation can be a useful indicator to follow for investors looking for diversification options for their portfolios. In general, assets with a high value of the indicator may not be ideal options to keep together, like Bitcoin and Gold right now.
IntoTheBlock has pointed out, however, that Ethereum‘s Correlation to Gold is still minimal at the moment, implying that ETH’s role in the market is different from BTC’s.
As for what it is, the analytics firm comments:
Ethereum’s limited correlation with gold points to its position as a more speculative, growth-driven asset. Its price movements are less influenced by external economic factors and more driven by the underlying ecosystem such as DeFi activity & staking.
BTC Price
Bitcoin has continued to show stale action recently, as its price is still trading around $63,500.
Featured image from Dall-E, IntoTheBlock.com, chart from TradingView.com
Keshav is currently a senior writer at NewsBTC and has been attached to the website since June 14, 2021.
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Keshav has been writing for many years, first as a hobbyist and later as a freelancer. He has experience working in a variety of niches, even fiction at one point, but the cryptocurrency industry has been the longest he has been attached to.
In terms of official educational qualifications, Keshav holds a bachelor’s degree in Physics from one of the premier institutes of India, the University of Delhi (DU). He started the degree with an aim of eventually making a career in Physics, but the onset of COVID led to a shift in plans. The virus meant that the college classes had to be delivered in the online-mode and with it came free time for him to explore other passions.
Initially only seeking to make some beer money, Keshav unexpectedly landed clients offering real projects, after which there was no looking back. Writing was something he had always enjoyed and to be able to do it for a living was like a dream come true.
Keshav completed his Physics degree in 2022 and has been focusing on his writing career since, but that doesn’t mean his passion for Physics has ended. He eventually plans to re-enter university to obtain a masters degree in the same field, but perhaps only to satiate his own interest rather than for using it as a means to find employment..
Keshav has found blockchain and its concepts fascinating ever since he started going down the rabbit-hole back in 2020. On-chain analysis in particular has been something he likes to research more about, which is why his NewsBTC pieces tend to involve it in some form.
Being of the science background, Keshav likes if concepts are clear and consistent, so he generally explains the indicators he talks about in a bit of detail so that the readers can perhaps come out having understood and learnt something new.
As for hobbies, Keshav is super into football, anime, and videogames. He enjoys football not only as a watcher, but also as a player. For games, Keshav generally tends towards enjoying singleplayer adventures, with EA FC (formerly FIFA) being the only online game he is active in. Though, perhaps due to being ultra-focused on the game, he is today a semi-pro on the EA FC scene, regularly participating in tournaments and sometimes even taking back prize money.
Because of his enthusiasm for anime and games, he also self-learned Japanese along the way to consume some of the untranslated gems out there. The skill didn’t merely remain as just a hobby, either, as he put it to productive use during his exploration for small-time gigs at the start of COVID, fulfilling a couple of Japanese-to-English translation jobs.
Keshav is also big into fitness, with agility and acceleration-related workouts making a big part of his program due to the relevance they have in football. On top of that, he also has a more traditional strength based program for the gym, which he does to maintain an overall fitness level of his body.
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