Bitcoin Correlation to Gold Rises as Investor Eye Safety

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Bitcoin’s correlation to gold has hit a two-year high as investors seek safer assets.

Gold’s correlation with Bitcoin now stands at 57%, a two-year high, according to figures from data provider Kaiko. The correlation has increased since March, when a crisis in several banks threatened the sector with financial contagion. Earlier in the month, the crypto surpassed its correlation with S&P.

Notice to Investors

In a tweet on Wednesday, Kaiko said, “Bitcoin’s rolling 30-day correlation to gold has surged since March and now stands at 57% – its highest level in nearly 2 years.”

The Bitcoin-gold correlation is a measure of how asset prices move over time. Correlation often comes into play when investors turn to other stores of value and safe-haven assets. As a result, prices are more sensitive to economic headwinds than those of other assets and commodities.

The world’s most popular cryptocurrency was the best performing asset in the first quarter of 2023, gaining 70%. Making it the best quarter since the first quarter of 2021. Bitcoin also left gold in the dust, which saw only 9.5% gains. Silver remained essentially flat, growing 0.3%, according to data released by Finbold on March 31.

Central bankers flock to gold

A recent poll of 84 central banks found that more than two-thirds of respondents believed their peers would increase their gold holdings in 2023. Reserve managers pointed to geopolitical risk and high inflation as reasons for holding the precious metal . The World Gold Councils annual survey also found that banks were using gold to diversify their portfolios in tough times.

Purchases and sales of gold by the central bank. Values ​​are in metric tons. Source: Metals Focus, Refinitiv GFMS, World Gold Council, UBS

Gold and Bitcoin have generally had positive years so far, currently sitting near their yearly highs. Bitcoin is hovering around $29,000, around $1,000 from its yearly high, according to Coinmarketcap. Meanwhile, the price of gold is around $2,000 down to just $50.00 from where it peaked nearly two weeks ago.

Investors are quietly optimistic about Bitcoin’s prospects in the near future. Continued financial turmoil and rising inflation are producing strong headwinds for the currency. Bitcoin’s upcoming halving is expected to give it further momentum in 2024.

Disclaimer

In accordance with the guidelines of the Trust Project, BeInCrypto is committed to providing impartial and transparent reports. This news article aims to provide accurate and timely information. However, readers are urged to independently fact-check and seek professional advice before making any decisions based on this content.

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