Bitcoin Correlation With Gold Hits 40-Day High As Safe Haven Asset Battle Intensifies

For years, Bitcoin (BTC) proponents have argued that the crypto is in line to become a safe haven and hedge against inflation with the potential to replace gold.

In particular, the reality of becoming a safe haven can be realized with the flagship cryptocurrency registering increased correlation with the precious metal among prevailing macroeconomic factors.

In particular, Bitcoin has hit a 40-day correlation with gold that stands at 0.50 after its value was around zero in mid-August, Bloomberg reported on October 22.

The correlation puts Bitcoin in the spotlight as digital gold, after a period where the cryptocurrency has mainly traded in step with stocks. In particular, both asset classes have been hammered by the prevailing inflation and interest rate increases.

Bitcoin is decreasing volatility

However, Bitcoin’s value has been consolidating around the $20,000 level for several weeks, a key driver of the asset’s falling volatility. Notably, the asset has also emerged as less volatile than some equity products such as the Dow Jones index, with the metric approaching an all-time low.

“A declining positive correlation with SPX/QQQ and a rapidly rising correlation with XAU indicates that investors may view Bitcoin as a relative safe haven as macro uncertainty continues and a market bottom remains to be seen,” said a Bank of America strategist.

Bitcoin and Gold’s Potential to Accumulate

As both Bitcoin and gold vie for safe haven status, a section of the crypto market believes that the assets have a chance to achieve significant returns in the future along with protecting wealth.

According to a Finbold report, the author of the personal finance book “Rich Dad, Poor Dad” Robert Kiyosaki, has argued that the economy is likely to crash, and both Bitcoin and gold can act as a store of wealth.

Furthermore, Bloomberg Intelligence commodity strategist Mike McGlone has argued after the extensive market correction in the first half of 2022 that both Bitcoin and gold are among the assets to lead the recovery.

At the same time, the analyst suggested that Bitcoin’s ability to remain stable after the latest rate hikes by the Federal Reserve indicates that the asset is maturing.

Meanwhile, Bitcoin continues to consolidate around the $19,000 level, trading at $19,100 as of press time.

Disclaimer: The content of this page should not be considered investment advice. Investment is speculative. When you invest, your capital is at risk.