Bitcoin (BTC) price correlation with gold has reached its highest level in six months. This shows that both assets are behaving similarly, which is different from the performance of Ethereum‘s Cryptocurrency, ether (ETH).
Precisely, The correlation between gold and bitcoin reached a score of 0.75, something not seen since Marchaccording to market intelligence platform IntoTheBlock. As the following chart shows, this is happening after it has been on the rise for the past two months.
Correlation of Bitcoin and Gold so far in 2024. Source: IntoTheBlock.
Such a correlation occurs despite the fact that gold is currently trading at an all-time high above $2,600, while bitcoin is 13% away from its record high of $73,700 six months ago.
On the contrary, ETH, the second largest crypto asset by market capitalization after BTC, perceives a minimal correlation with gold. Currently, this asset is trading at USD 2,600, which is 45% below its historical maximum marked three years ago. This shows that its trade is influenced by factors other than those that impact the metal.
“Bitcoin’s growing correlation in recent months coincides with investors’ fears of a recession and a lack of confidence in the dollar,” IntoTheBlock explains. Historically, gold has acted as a safe haven asset, something that also resonates with the digital currency due to its similarities.
💥 Gold hits a new price record: $2,670 per ounce.
Historic record, again.
There are those who claim that this behavior shows that a BIG CRISIS is coming 👀 pic.twitter.com/qu7jZR7EQ1
— CryptoNews (@CriptoNoticias) September 25, 2024
Bitcoin is seen as digital gold
Both metal and bitcoin have a Mining decentralized which in the case of bitcoin is limitedwhich facilitates its price increase in response to demand. This is why, in times of economic and geopolitical uncertainty, the demand for such assets tends to increase. These attributes have led to the currency being classified by many as “digital gold.”
Bitcoin is even seen by certain investors as an improved version of gold, because its emission is automatically reduced every four years. This is something that will happen until 21 million units are mined. In addition, it stands out for its resistance to censorship, possibility of free transfer at low cost and digital storage in a wallet self-custody.
Given the correlation between these assets, IntoTheBlock notes that “this flight to safety highlights Bitcoin’s changing role in macroeconomic hedging.”
Instead, the market intelligence platform stands out. ETH’s limited correlation with gold indicates its position as a more speculative asset and driven by growth. Unlike bitcoin, which was created as an improved form of money, ether functions as the native cryptocurrency of Ethereum, a network with other goals.
Ethereum It is a decentralized platform which allows the creation of smart contracts and decentralized applications (dApps). Consequently, the ETH market is largely impacted by the development of this ecosystem, which this year has been affected by the traction of skills like Solana.
In this regard, IntoTheBlock stresses that ETH price movements, compared to BTC and gold, are less influenced by external economic factors and more driven by the underlying ecosystem. This explains its contrasting price performance.
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