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The rise of digital gold: Bitcoin’s correlation to gold hits multi-year high

The rise of digital gold: Bitcoin's correlation to gold hits multi-year high

Bitcoin’s (BTC) correlation with gold reached a multi-year high last week and is presently above 50%, exceeding its correlation with U.S. stocks

Indeed, Bitcoin has withstood the current instability in the financial industry and mounting regulatory uncertainty very well, skyrocketing by over 70% YTD, greatly surpassing traditional asset classes as they see ‘digital gold’ as a potential store of value.

Together with on-chain statistics indicating a growing percentage of Bitcoin long-term investors, this may suggest that Bitcoin’s appeal as a haven asset is on the ascent, according to data from Kaiko published on April 3.

Gold climbs 8% since March bank crisis began

Notably, both the flagship digital asset and the precious metal suffered significant declines last year. However, gold has also seen a price increase of 8.6% since the collapse of Silvergate on March 8 brought about the banking crisis, bringing the price closer to its all-time high of $2,000, which was obtained shortly after the start of Russia’s invasion of Ukraine. 

With Kaiko noting back in October:

“After benefiting heavily from the Russia-Ukraine conflict in the first quarter of the year, gold has lost all its gains and is currently down 10% YTD. Bitcoin has also declined double-digits this year dragged down by global monetary policy tightening.”

On top of that, “gold has failed to act as a safe-haven asset i.e., an asset that is expected to retain or gain in value during periods of economic downturn,” in spite of “core inflation remaining persistently high.”

Bitcoin and tech stocks

Meanwhile, huge macro investors have already decreased their risk for the most part, which might explain the weakening connection with tech stocks. 

While the Nasdaq 100 has officially entered a bull market (up 20% or more from its December lows), volatility has decreased. After FTX’s collapse, the disparity between crypto and U.S. stock market volatility has become wider and wider. 

As market depth has been low for more than a month, increased BTC volatility may be attributed in part to a lack of liquidity. Since Binance, the biggest and most liquid exchange, faces regulatory restrictions that might increase risk aversion among market makers, this situation is not likely to change.

Kiyosaki says to buy Bitcoin and Gold

Amid concerns over the potential economic collapse Robert Kiyosaki, the author of the best-selling personal finance bookRich Dad Poor Dad,” has warned about the state of the global economy, citing the United States Federal Reserve decisions as the catalyst for an imminent market crash. 

Kiyosaki believes alternatives exist to cushion investors against the effects of a possible economic crash, highlighting Bitcoin and precious metals, such as gold and silver, are valuable assets to protect against mounting inflationary pressures. 

Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.

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