Switching Lanes: Bitcoin ditches the Altcoin path; opts for the Golden Road

  • 13 July 2019, Saturday, 08:10

Bitcoin is switching lanes, shifting gears and flooring it; not on the altcoin path, but on the golden road.

2019 so far, can be described as a breakthrough, not just in price, but also in competition. Not only is Bitcoin [BTC] up by over 250 percent since its valuation at the beginning of the year, but it has been in fierce competition with its old-foe, gold.

Digital gold and tangible gold have been facing off for years, but 2019 saw a Grayscale campaign take that competition to a whole new level. The #DropGold campaign irked many in the gold community, most notably Peter Schiff, as the cryptocurrency community embraced it as a rallying cry.

However, despite the competition and its surrounding antics, the correlation between Bitcoin and Gold’s prices has skyrocketed in 2019 like never before.

According to a study by cryptocurrency analytics firm Longhash, Bitcoin today, is more correlated to gold than altcoins. The report read,

“There has been an increased correlation between gold and Bitcoin prices. At the same time, altcoins have become less correlated with Bitcoin.”

Using the Spearman’s rank correlation coefficient on the YTD correlation data from Coin Metrics, the “shift” in correlation between Bitcoin-major altcoins and Bitcoin-gold began in April. The report studied the absolute and relative price change between April 1 and July 10.

Interestingly, the Bitcoin bull-run of 2019 began on April 2 when BTC’s price shot up by 17 percent in a day, which eventually took the price from a low of $4,100 to a peak of $13,800.

The correlation measured on a scale of -1 to 1 detailed three major altcoins, Ether [ETH], Bitcoin Cash [BCH], and Litecoin [LTC], as well as gold. The largest altcoin in the market, Ether, saw a change from 0.91 to 0.73, BCH from 0.82 to 0.72 and Litecoin from 0.81 to 0.61.

Gold, on the other hand, saw a positive correlation change from 0.07 to 0.22. At first, this massive increase is indicative of a side by side movement between the price of the digital and the tangible, but the report states that the severity is still minimal. Further, the correlation between the two forms of gold has changed from “very weak” to “weak,” but weak nonetheless.

The correlation between the king coin and the altcoins, due to the drop, has moved from “very strong” to “strong.”

Earlier in the year, the correlation between Bitcoin and altcoins was at its peak in February, while the price was scrimmaging upwards. When the price rally began in April, the correlation decreased substantially, with king coin leaving the minority in its dust.

Bitcoin’s market dominance was on the verge of slipping below majority prior to the rise. Since then however, it has increased to as high as 68 percent.

The report added that Bitcoin’s golden relationship could be a telling tale in the price of two financial assets,

“In the long term, it would make sense for Bitcoin and gold to become more correlated — at least if there is any truth behind Bitcoin’s “digital gold” meme. These past few months could be an indication that Bitcoin is already viewed as a digital alternative to gold.”

Source: ambcrypto.com