Bitcoin gold connection reaches 40-day high

Bitcoin (BTC) advocates have argued for years that the cryptocurrency is poised to become a safe haven asset and a hedge against inflation, with the potential to replace gold.

Notably, the concept of Bitcoin as a safe haven might become a reality if the cryptocurrency’s connection with gold increases in response to current macroeconomic conditions.

For example, Bitcoin has reached a 40-day correlation with the gold of 0.50 after the value was at zero in mid-August, according to a report by Bloomberg on October 22.

Following a time in which the cryptocurrency traded mostly in tandem with stocks, the correlation highlights Bitcoin’s role as digital gold. Notably, both asset classes have been negatively affected by inflation and interest rate increases.

However, Bitcoin’s price has been stabilising around $20,000 for weeks, a significant factor in the asset’s declining volatility. Notably, the asset has emerged as less volatile than some equity products such as the Dow Jones index, with the volatility indicator nearing a record low.

A Bank of America analyst said, “A decelerating positive correlation with SPX/QQQ and a quickly increasing correlation with XAU suggest that investors may consider Bitcoin as a relative safe haven if economic uncertainty persists, and a market bottom remains unresolved.”

As Bitcoin and gold vie for the position of safe haven, a portion of the crypto market thinks the assets have the potential to provide big returns in the future in addition to preserving capital.

According to a Finbold article, Robert Kiyosaki, author of the personal finance book “Rich Dad, Poor Dad,” has said that the economy is going to fail, and both Bitcoin and gold may be used as a form of asset storage.

In addition, Bloomberg Intelligence commodities analyst Mike McGlone has maintained that Bitcoin and gold are among the assets that would lead the rebound following the general market drop in the first half of 2022.

Moreover, the expert noted that Bitcoin’s ability to stay steady after the Federal Reserve’s most recent interest rate rises reflects the asset’s maturation.

Bitcoin continues to consolidate around the $19,000 mark, trading around $19,100 at the time of publication.

Also Read: Ripple’s Director Of Engineering Has Decided To Leave The Company