Bitcoin and Gold: The Increasing Correlation and Its Implications
According to reports, data from blockchain analysis company Glassnode shows that in the past 12 months, we have discovered an interesting phenomenon: the correlation between the pe
According to reports, data from blockchain analysis company Glassnode shows that in the past 12 months, we have discovered an interesting phenomenon: the correlation between the performance of Bitcoin prices and gold (a safe haven for traditional robust currencies) has increased. On a 30 day, 90 day, and 365 day basis, there is a high positive correlation between these two assets, which remained high during the recent US banking crisis a few weeks ago. In 2023, a total of 6.2 million BTCs returned to profitability (accounting for 32.3% of the supply).
Data: In 2023, a total of 6.2 million BTCs returned to profitability, accounting for 32.3% of the supply volume
The correlation between Bitcoin prices and gold has been on the rise in the past 12 months, as shown by data from blockchain analysis company Glassnode. In this article, we explore this interesting phenomenon and its implications for investors and the cryptocurrency market.
Introduction
As the world grapples with economic uncertainty and market volatility, investors are increasingly seeking safe haven assets for their portfolios. Traditionally, gold has been the go-to safe haven for mainstream investors, but in recent years, Bitcoin has emerged as a credible alternative. While the two assets differ in many ways, they share some common characteristics that make them attractive to investors, such as scarcity and decentralization.
The Correlation between Bitcoin and Gold
The correlation between Bitcoin and gold has been increasing in the past 12 months, as shown by Glassnode data. On a 30-day, 90-day, and 365-day basis, there is a high positive correlation between these two assets. This means that when gold prices rise, so do Bitcoin prices and vice versa. This correlation has remained high during the recent US banking crisis, which has led to some investors seeking safety in both assets.
Implications for Investors
The increasing correlation between Bitcoin and gold has important implications for investors. For those who already hold these assets, it means that they are likely to move in tandem, which can be both positive and negative depending on market conditions. If both assets are performing well, the investor’s portfolio will benefit, but if both assets are performing poorly, the portfolio will suffer. For those who are considering investing in either asset, the correlation suggests that they may want to consider diversifying their portfolio with both assets to spread their risk.
The Supply of Bitcoin
Glassnode data also shows that in 2023, a total of 6.2 million BTCs will have returned to profitability, accounting for 32.3% of the supply. What does this mean for the Bitcoin market? It suggests that as more BTCs become profitable, there may be more selling pressure on the market, which could lead to a decrease in prices. However, it is important to note that this is just one factor among many that can influence the price of Bitcoin.
Conclusion
The increasing correlation between Bitcoin and gold is a fascinating phenomenon that highlights the changing perceptions of investors towards these assets. While they differ in many ways, they share some common characteristics that make them attractive to investors seeking safety and stability in uncertain economic times. The data from Glassnode suggests that investors may want to consider diversifying their portfolios with both assets to spread their risk. However, as with any investment, it is important to do your own research and consult with financial professionals before making any decisions.
FAQs
#What is the relationship between Bitcoin and gold?
In the past 12 months, the correlation between Bitcoin and gold has been on the rise, indicating that they tend to move in tandem.
#Why are Bitcoin and gold considered safe haven assets?
Both Bitcoin and gold are considered safe haven assets because they are decentralized, scarce, and have historically held their value during times of economic uncertainty.
#Should investors diversify their portfolios with both Bitcoin and gold?
As with any investment, it is important to do your own research and consult with financial professionals before making any decisions. However, the increasing correlation between Bitcoin and gold suggests that diversifying with both assets may be a prudent risk management strategy.
#
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