Bitcoin Correlation With Gold Rises As Investors Eye Security
Bitcoin’s correlation with gold has hit a two-year high as investors look for safer assets.
Gold’s correlation with Bitcoins is now at 57%, a two-year high, according to figures from data provider Kaiko. The correlation has increased since March when a crisis in several banks threatened the industry with financial contagion. Earlier in the month, crypto outperformed the correlation with the S&P.
Investors take note
In a tweet on Wednesday, Kaiko stated, “Bitcoin 30-day rolling correlation with gold has increased since March and now stands at 57% – the highest level in nearly 2 years.”
The Bitcoin-Gold correlation is a measure of how the asset’s prices move over time. The correlation often comes into play when investors look at alternative stores of value and safe havens. As a result, prices are more exposed to economic headwinds than other assets and commodities.
The world’s most popular cryptocurrency has been the best-performing asset in Q1 2023, with a 70% increase. Making it the best quarter since Q1 2021. Bitcoin has also left gold in the dust, which only posted gains of 9.5%. Silver remained largely flat, with growth of 0.3%, according to data reported by Finbold on March 31.
Central bankers flock to gold
A recent poll of 84 central banks found that more than two-thirds of respondents believed their peers would increase their gold holdings in 2023. The reserve managers highlighted geopolitical risk and high inflation as reasons to hold onto the precious metal. The World Gold Council’s annual survey also found that banks used gold to diversify their portfolios in difficult times.
Both gold and Bitcoin have generally had positive years so far, and are currently near their annual highs. Bitcoin is hovering around $29,000, about $1K off its annual high, according to Coinmarketcap. Meanwhile, the price of gold is about $2,000—just $50.00 away from where it peaked nearly two weeks ago.
Investors are quietly optimistic about Bitcoin’s prospects in the near future. Continued financial turmoil and rising inflation are creating strong headwinds for the currency. The upcoming Bitcoin halving is expected to give it another boost in 2024.
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