Bitcoin Emerges As Safe-Haven Asset With Correlation To Gold At 2-Year High
Bitcoin, the digital currency that was once considered a volatile investment, has found a surprising ally in the form of an age-old commodity: gold.
Since March, the correlation between the alpha cryptocurrency and the precious metal has steadily increased, providing investors with a safe haven from the ongoing banking crisis and rising interest rates.
But what exactly is driving this unexpected Bitcoin-gold partnership, and how long can it last?
Bitcoin Outperforms Gold Amid Banking Crisis
As the banking crisis continues to rock the financial world, investors are turning to Bitcoin as a safe haven for their money. In fact, many are choosing cryptocurrency over the traditional safe haven asset gold because of its higher returns and greater stability.
Currently trading near the psychological $30,000 level at $28,936, BTC has seen a staggering 3% increase over the past 24 hours. This increase in demand for Bitcoin is due to its increasing correlation with gold, which has surpassed the 50% level and is now at 57%, as per data by market analysis company Kaiko.
Bitcoin’s continuous 30-day correlation with gold has increased since March and now stands at 57% – its highest level in almost 2 years.#BTC #Gold #correlation pic.twitter.com/l7N5eYAgEl
—Kaiko (@KaikoData) April 26, 2023
This correlation between the digital currency and gold has been steadily increasing since March, when regulators closed crypto-friendly banks, causing a banking crisis. As a result, investors are turning to Bitcoin as a more reliable alternative to the yellow metal.
The Rise of Cryptocurrencies as a Safe Haven Asset
Bitcoin has long been considered a risky investment due to its volatile price fluctuations and lack of regulatory oversight. However, in recent years it has become a active safe harbor for investors seeking protection against traditional market risks.
Unlike fiat currencies and other traditional assets, Bitcoin operates independently of central banks, making it less vulnerable to inflation and government interference.
Furthermore, the decentralized nature of Bitcoin gives investors greater control over their assets and reduces their exposure to systemic risk.
With the ability to store and transfer wealth across borders without the need for intermediaries, Bitcoin offers a level of financial freedom and security unmatched by traditional assets.
BTC/USD reclaims $29K territory and trading at $29,112 on the daily chart at TradingView.com
Its finite supply and digital scarcity also make it a hedge against inflation, as its value is not subject to the vagaries of government policies or macroeconomic factors.
As a result, Bitcoin has gained increasing recognition as a safe haven asset, especially in times of crisis. economic uncertainty and market volatility.
Its ability to provide investors with a reliable and secure store of value has made it an attractive option for anyone looking to diversify their portfolios and protect their wealth from external threats.
-Featured image from AndroidCure.com