Bitcoin’s Correlation to Gold Hits Record Highs Amid US Banking Crisis
Bitcoin Correlation With Gold
• Bitcoin’s correlation with Gold has surged in recent months.
•The “BTC correlation to Gold” indicates how closely Bitcoin is following the movements taking place in the price of one troy ounce of Gold.
• The indicator has mostly registered high positive values over the last twelve months, suggesting that the two assets have become strongly tied during this period.
Recent US Banking Crisis
As the US banking sector faced a crisis in recent weeks, Bitcoin’s correlation with gold increased significantly. This ‘BTC Correlation to Gold’ metric measures how closely bitcoin follows gold prices, where negative values mean BTC is going in the opposite direction and positive values imply both assets are moving together. In addition, when the value is zero it means there is no pattern between them.
30-Day Correlation Chart
A chart showing the trend in 30-day BTC correlation to gold over the past few years reveals that for most of 2021 and early 2022, there was no strong positive correlation between them. However, as bear market conditions arose later on, their relationship strengthened and all three moving averages (30-day, 90-day and 365-day) currently show strong positive values. The only exception was during the FTX crash which briefly caused an extreme negative reading on this indicator before things returned back to normal afterwards.
Benefits Of A Positive Correlation
Having a high positive correlation between these two assets can be beneficial for investors as it suggests they could benefit from diversifying into both markets at once due to their similar price movement patterns. This could potentially reduce risk while increasing returns since one asset may be performing better than another at any given time depending on market conditions.
Conclusion
Overall, data shows that Bitcoin’s correlation with gold has increased significantly over the past year and now stands at very high levels according to multiple moving average measurements of this metric. This could provide an opportunity for investors looking for diversification benefits by investing in both markets simultaneously since their prices are likely to move similarly based on current trends.
