Gold is one of the assets that the falls in the markets have affected, leading it to decrease by 47%, the worst drop since mid-March. Following this fall, the correlation between gold and Bitcoin dropped by 24%, since the digital asset remained stable.
Although gold and Bitcoin have been related due to their importance and impact on the economic sector, they move in different scenarios (virtual and physical). Today, both assets do not seem to be so connected, since the coronavirus crisis has marked differences between them.
In 2019, gold and Bitcoin showed similar movements that led them to correlate at 0.827 for much of the year. However, this correlation that they were beginning to have is fading.
Market Falls
During the last week of September, the correlation between the digital currency and the precious metal closed in the red.
Analysts consider that financial markets, like the area of digital assets, have recently shown a series of variations in their prices. Various tensions and fears, due to the uncertainty about the next presidential elections in the United States, have caused this negative closing.
Various investment assets such as gold and cryptocurrencies reflected these tensions. While gold fell by more than 2%, cryptocurrencies such as Ethereum experienced double-digit declines, with losses exceeding 10%.
However, the recovery after the drop in value on September 23rd has generated some good signs. This movement showed a consistent rebound, which will continue until the last quarter of the year. Over the past two years, this rebound has distinguished itself by having a joyous start along with a second-half in which profit-taking predominates.
Gold-Bitcoin Correlation Collapses
The recent tensions harmed all financial markets, from stocks to commodities. Besides, the precious metal closed the quarter with a decline in value of about 47%. In other words, it fell by almost half, which is why analysts consider it the worst drop since last March.
Similarly, the declines since early August, when gold rose in value above USD 2,700 per ounce for the first time in history, have led to the current decline in prices. This drop of more than 10%, reaching USD 1,854 per ounce, favors the collapse of the daily correlation between Bitcoin and gold, placing it below 24%.
This figure makes it possible to highlight the good performance of the so-called “digital gold”, despite the particularly challenging context that September provided.
Crypto Market in Positive
In recent days, despite the above, the crypto market has shown positive signs, since it has had more than 75% above parity.
Out of a total of 15 main crypto assets, there are only two signs in red: Binance Coin (BNB) and Polkadot (DOT), which have lows of just over -0.2%. For their part, Bitcoin SV (BSV) and Cardano (ADA) are among the best placed, having more than 8%.
In the same way, when making an extension of the analysis that takes into account the top 100, only the cryptocurrencies Arweave (AR) and Swipe (SXP) perform better.
Concerning the digital asset Cardano, the market appreciated the return to trading on the Bittrex exchange, especially after the 30-day blocking. This return was because the maintenance interventions took place after the Shelley protocol upgrade in early July.
By Alexander Salazar
