The coupling between both assets reached a new monthly high of 68.9%. The price of gold remains around USD 2,000 per ounce.
The correlation between the prices of Bitcoin (BTC) and gold reached a monthly record of 68%. This is an all-time figure that shows co-movements in the price of both assets. The event takes place one week after gold reached a price of USD 2,075 per ounce, an all-time price for the precious metal.
According to data from the market analytics firm Skew, the correlation showed multiple variations during the last 30 days. In that period, the lowest correlation between both assets was -43% (-0.43) and a high that touched 70% (0.7) for the first time in history.
The market research agency posted a message with the figure in its Twitter account. They stated that “the monthly Bitcoin/gold correlation is reaching new all-time highs, driving the store-of-value narrative for BTC in these times when ‘the money printer is going brrr’.”
The recent coupling between gold and Bitcoin also reached a peak in April of this year, almost a month after the price of the first cryptocurrency had dropped by 40%. At the time, the correlation between both assets exceeded 0.6 (60%) in the Return Rolling Correlation metric for the first time.
The figures would be a reflection of the current conditions of the global economy. The world in general entered a process of economic contraction and general uncertainty due to the COVID-19 pandemic.
In April, the International Monetary Fund (IMF) classified what was happening as an unusual disaster with a negative forecast of 6.1% for the developed economies at the end of 2020. Four months ago, experts already predicted that Bitcoin could represent an alternative to face a potential economic recession.
The fact that the price of Bitcoin and that of gold show a high correlation is a sign that the first cryptocurrency is gaining spaces as a safe-haven option. This is happening in the event of inflation or a possible drop in the price of the US dollar.
People traditionally see gold as a safe haven for investors, which are framed in the fact that the precious metal is limited and hard to find, far away from the inflationary monetary policies of governments.
Even though the price of Bitcoin has shown high volatility so far in 2020, it is also important to remember that the cryptocurrency recovered 22% of its price in a few days, after the collapse/crash in March. That situation allowed BTC to decouple from the hit stock market, which also dropped/collapsed after the World’s Health Organization (WHO) decreed a COVID-19 pandemic five months ago.
At the time of writing this article, the price of Bitcoin has a price of USD 11,767 per unit, according to CoinMarketCap. On its part, gold is currently trading at USD 1,948 per ounce, according to Monex. These prices indicate that the main cryptocurrency and the precious metal continue to be the best investment options.
By Alexander Salazar
