Bitcoin’s Correlation to Gold Increases as Crypto Rally Continues

Bitcoin’s Correlation to Gold Increases as Crypto Rally Continues

The relationship between Bitcoin and gold has strengthened in recent weeks, supporting claims by bitcoin supporters that the crypto-token is also a safe haven. Meanwhile, the correlation with US stocks has decreased significantly amid a banking crisis, especially in the last week.

h2 Bitcoin decoupling from stocks/t2

Bitcoin’s correlation to gold has been on an upward trajectory in recent weeks, branching off from equity prices as the ongoing banking crisis weighs on the stock market. Bitcoin’s relationship with stocks began to weaken around the SVB collapse, which triggered the current bank rout, while the cryptocurrency’s correlation with gold increased slightly earlier.

Flip in relationships support claims by bitcoin supporters who praise the cryptocurrency for offering the same safe-haven benefits as bullion. Their arguments have become unconvincing in recent years as bitcoin’s correlation with stocks has hit new records.

The stock market, which has struggled over the past year due to record inflation and aggressive rate hikes, has come under more pressure in the past week after US regulators shut down SVB, marking the second-biggest bank failure since 2008. Bank stocks were particularly hurt, falling to multi-year lows as investors bailed out.

h2 Bank Crisis and Core KPI Jump in Europe Fuel Fresh Bitcoin Rally/t2

However, recent events have fueled another rally in Bitcoin, which broke the $26,000 threshold twice this week. And with that rally, the cryptocurrency’s tendency to move with US stocks has diminished, while its relationship with the yellow metal has strengthened.

The crypto rally got an extra boost after fresh consumer price index (CPI) data in Europe showed that core inflation in the Eurozone rose from 5.3% in January to 5.6% in February. The world’s number one cryptocurrency has climbed more than 6.5% in the past 24 hours.

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Meanwhile, gold prices have also been on the rise. Spot gold rose 1.2% to $1,945 an ounce as investors turned to safe-haven assets amid the unexpected banking crisis. While the short-term outlook for gold looks positive, the bullion could come under pressure if the Federal Reserve decides to deliver an aggressive rate hike next week. However, most believe the central bank will choose a further 25 basis point bps increase.


Disclaimer: Neither the author, Ruholamin Haqshanas, nor this website, The Tokenist, provides financial advice. Please see our website guidelines before making any financial decisions.

This article was originally published on The Tokenist. Check out The Tokenist’s free newsletter, Five Minute Finance , for weekly analysis of the biggest trends in finance and technology.

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