In a world where traditional assets are widely affected by macroeconomic and global political scenarios, people are found investing in safe-haven assets like Gold or Bitcoin and other assets for storing value. The fear of an impending recession and global political unrest has caused people to do just that.
Bitcoin’s price has risen rapidly since April 2, and so has the price of Gold. However, the same cannot be said for S&P 500 or Dow Jones, which hit a new peak and collapsed shortly thereafter.Bitcoin – Gold Correlation
Mati Greenspan, Senior Market Analyst at eToro, tweeted the correlation between Gold and Bitcoin and suggested that it was getting more pronounced with each passing day.
As seen in the chart above, the price of gold and Bitcoin are both very closely related, at least in terms of their ascent. Greenspan said that they were in “lockstep over the last month.”
Additionally, the correlation between Bitcoin and Gold has reached a level that was last witnessed in 2016. The magnitude of the number as seen on the Y-axis for Gold and BTC indicates how strong the correlation is. In 2016, this number fell from 0.33 to 0.21 level. However, at press time, it was at 0.22 level. The above chart indicates that both Gold and Bitcoin are getting more correlated with every passing day.
Although the correlation is very small, Greenspan tweeted,
“Yes. The numbers are still small though. I expect they’ll likely rise drastically over the next few years.”
The aforementioned correlation further indicates that rising tensions between the U.S, China, and Iran, and the scare of an impending global recession, has caused the price of Gold and Bitcoin to rise steadily.