- Bitcoin’s correlation to gold hit a multi-year high of about 50%.
- BTC’s relationship with equity markets weakened amidst a deepening banking crisis.
Bitcoin’s [BTC] price movement exhibited a strong resemblance to gold in the recent weeks, reinforcing the king coin’s long-supported narrative of being a safe-haven asset.
How much are 1,10,100 BTCs worth today?
As per blockchain analytics firm Kaiko, BTC’s correlation to gold hit a multi-year high of about 50%. On the other hand, its correlation with U.S. stocks dipped considerably, exacerbated by the collapse of high-profile banking entities.
#Bitcoin‘s correlation with gold surpassed its correlation with the S&P 500 👀 pic.twitter.com/Kqp42KRcX5
— Kaiko (@KaikoData) April 3, 2023
‘Digital Gold’ is back!
For a long time, Bitcoin was positioned as the safe-haven asset by proponents, i.e., an asset whose value is anticipated to remain stable or increase throughout economic downturns, something on the lines of a bullion market.
However, during the bear market of 2022, BTC and Gold remained largely aloof while the correlation between U.S. entities and crypto reached all-time highs, prompting critics to challenge the ‘Digital Gold’ argument.
Source: Kaiko
But as evident, its relationship with equity markets weakened amidst a deepening banking crisis, prompting investors to dump bank stocks and explore crypto markets.
Consequently, prices rallied and BTC recorded gains of nearly 24% during March, as per CoinMarketCap. On a year-to-date (YTD) basis, the largest crypto by market cap surged 65%.
The yellow metal, too, made significant gains in the previous month. Spot Gold rose 9% since the collapse of Silicon Valley Bank (SVB) on 8 March, as safe-haven assets attracted more investors.
Source: Trading View Gold Spot/USD
Rise in BTC’s volatility
Another interesting aspect of BTC’s departure from traditional stocks has been its growing volatility. During the latter part of 2022, the coin’s volatility hit a record low and even dipped below equity indices like Nasdaq and S&P 500.
However, with the onset of the bull cycle in 2023, the price exhibited greater price swings in the vertical direction, attracting both bullish and bearish traders.
Source: Trading View; Bitcoin Historical Volatility Index
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Meanwhile, bullish sentiments for BTC gathered more strength as the number of coins held on the exchanges continued to decline. Falling exchange reserves are a strong indication of reduced selling pressure and growing optimism in the market.
At the time of writing, BTC exchanged hands at $28,087.40, gaining 1.26% in 24 hours.
Source: CryptoQuant
