As an analyst with over two decades of experience in the financial markets, I have witnessed numerous shifts and trends that have reshaped the investment landscape. The recent decoupling between Bitcoin (BTC) and gold has caught my attention, as it could potentially open new avenues for investors seeking diversification.
Bitcoin is frequently called “digital gold” because it functions similarly to traditional gold in some aspects. It has established itself as a distinct asset class, and importantly, has served as a dependable store of value throughout the years. While gold is certainly older than Bitcoin, these two assets are regularly employed by investors as a safeguard against economic turmoil and inflation.
It’s quite intriguing that Bitcoin and gold typically tend to move together, which can make it challenging for investors to diversify their portfolios. However, recent trends suggest that these two assets are starting to deviate from one another, a shift we haven’t seen for some time in the market.
BTC Is Losing Correlation With Gold — What Next?
In a recent Quicktake post on the CryptoQuant platform, an analyst with the pseudonym Darkforst talked about the existing relationship between the price of Bitcoin and gold. According to the pundit, there is an ongoing decoupling between the crypto market leader and the gold market.
In simple terms, correlation is a measurement that shows how closely related the price movements of two particular assets are, and whether they move in the same direction or not. A positive correlation indicates they’re moving together, while the closer the correlation value is to 1, the more similar their price patterns become.
Conversely, if the correlation coefficient is less than zero, it suggests these assets move inversely or oppositely. As the value gets closer to -1, it signifies that the assets have a weaker, inverse relationship.
In contrast, although the gold market has seen positive growth lately, its price has dropped significantly over the last few weeks. Conversely, Bitcoin’s value has surged powerfully during November, setting new record highs repeatedly in recent times.
Consequently, the relationship between Bitcoin’s price and gold has dropped below the zero line, entering the realm of negative correlation, as illustrated in the chart above. According to Darkfost, this decoupling appears to benefit Bitcoin, potentially leading to a “shift in liquidity” and attracting more capital towards the leading cryptocurrency.
Bitcoin Price At A Glance
From my analysis at this moment, Bitcoin’s price stands approximately at $98,000, showing a minor decrease of nearly 1% over the past day. However, on a weekly scale, its performance remains impressive, with an increase of over 7%, as indicated by data from CoinGecko.
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2024-11-24 14:41