Bitcoin’s Correlation with Gold Hit its Highest Level in 12-Months

Weekly Update

The global crypto market cap is down by 1.18% to $956.23B at the time of writing this article. Over the past 24 hours, the overall volume of the cryptocurrency market has decreased by 14.75% to $52.46B. In comparison to last week, the crypto market has performed on similar levels, with the market capitalization of crypto assets slightly increasing. It only goes to prove that Bitcoin and other cryptocurrencies are stabilizing at these current levels, and have been outperforming stocks and major currencies over the last month.

DeFi’s total 24-hour volume is $3.02B, or 5.76% of the overall crypto market volume. All Stablecoin volume is currently $48.52B, or 92.50% of the 24-hour volume of the whole crypto market.

Bitcoin was trading at about $19,931.09 at the time of writing. According to data from CoinMarketCap, Bitcoin’s dominance is currently 39.97%, an increase of 0.10% from the previous day.

The market has been more stable this week. Minor corrections are healthy in a volatile market, and they frequently result in the asset reaching a new all-time high. While we are in a bear market, it is important to remember that there are benefits to being in a bear market as an investor, especially with crypto assets.

Bitcoin’s Correlation with Gold

Gold is no longer shining brighter than the rest of the financial market. The precious metal has lost all of its gains and is down 10% year to date. Bitcoin, on the other hand, has fallen primarily as a result of the reasons for the current crash.

To keep inflation under control, central banks have raised inflation targets. Despite monetary tightening, inflation has remained stubbornly high. Gold, too, has failed to serve as a safe-haven asset. As a safe asset, Gold is expected to perform well as a store of value during periods of fiat currency inflation and depreciation.

As inflation has risen in recent months, the value of Bitcoin and Gold has plummeted, resulting in a year-high correlation of +0.4, According to Kaiko. A correlation of +1.0 indicates that two assets are moving in perfect sync in the same direction. Bitcoin has remained uncorrelated with Gold over the last year. The correlation of the two assets was between -0.2 and +0.2 over the last year.

The Bitcoin community could view the correlation between Bitcoin and Gold as a good thing because crypto assets can be used as a store of value. While the debate over which is a better investment between Bitcoin vs Gold continues, investor sentiments toward viewing a digital decentralized asset like Bitcoin as a more lucrative, safer, and better option continue to spread.