Bitcoin-Gold Correlation Near Record High, Investor says BTC Will ‘WAY Outperform’ the Metal in 2020

  • The (Peterson) correlation between gold and BTC climbed to 0.217, last seen in October 2016
  • Are we seeing the emergence of a new safe haven asset?

Last week, the tension between the US and Iran that rose resulted in Bitcoin showing signs of being “digital gold.”

It all started with the announcement of the Iranian general Qassem Soleimani’s death. Gold and bitcoin both jumped shortly after the news. A couple of days later, both digital gold and gold spiked together when the news about Iran bombing Iraq broke out.

Lastly, when President Donald Trump gave his de-escalation speech, the price tumbled at about the same time.

This isn’t something that happens very often. The rare occurrence of such events led industry commentators to believe that this could mean Bitcoin is becoming a “safe haven.”

Interestingly, Bitcoin’s correlation with gold has risen to 2016 levels. The (Peterson) correlation between gold and BTC climbed to 0.217 on Jan. 10. This level was last hit in October 2016 and before that in April 2013. The highest this correlation has ever been was in early October 2016 at 0.22.

The correlation between both assets was below zero about half a year ago but these levels haven’t been seen since August 2016 and strengthen the “digital gold” narrative for bitcoin.

Although, it can’t be ignored that this is just short-term price action which could be a spurious correlation. So, a long term evaluation is necessary to see if this holds any merit.

But Bitcoin has started to make a transition from a risk-on asset to becoming a safe haven as the leading cryptocurrency finds a place in the world market and investors’ portfolio.

Bitcoin already offers more crucial benefits over gold in today’s world of censorship, lack of privacy, and fear and threat of confiscation.

When it comes to being an investment with better returns, Bitcoin beats gold, with a wide margin.

In 2019, while gold surged 18%, Bitcoin price saw an increment of 90% in its value. Investor Preston Pysh expects the same trend to follow this year as well. Pysh said,

“Since March 2019, Gold has started to outperform the S&P500. I expect that trend to persist moving forward. But, I think Bitcoin will WAY outperform gold. Bonds are a disaster – they are all denominated in fiat – good luck with that long-term.”

Currently, gold is making a retracement, down at $1,550 per ounce after reaching its nearly seven-year high on Jan. 10 at $1,562 per ounce. The yellow metal could see more downside from here, according to analysts.

Bitcoin, on the other hand, has fallen from $8,450 last week to $8,080. Just like the price, trading volume has also declined from over a billion to about $533 million.

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Author: AnTy

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