Bitcoin Correlation With Gold Now At Highest Level Since March
26 September 2024 - 12:00AM
NEWSBTC
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 post 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.
Related Reading: Bitcoin Could Top At $400,000 Based On This Model,
Analyst Says 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. Related Reading: Bitcoin
MVRV Ratio Is At A Critical Retest: Can Bulls Triumph? 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
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