Bitcoin, the digital currency once considered a volatile investment, has found a surprising ally in the form of the age-old commodity: gold.
Since March, the correlation between the alpha crypto and the precious metal has steadily increased, providing investors with a safe haven in the face of the ongoing banking crisis and rising interest rates.
But what exactly is driving this unexpected partnership between Bitcoin and gold, and how long can it last?
Bitcoin Outshines 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 the crypto over the traditional safe haven asset, gold, because of its higher returns and increased stability.
Currently trading near the $30,000 psychological level at $28,936, BTC has recorded an impressive rally of 3% in the last 24 hours. This surge in demand for Bitcoin is due to its rising correlation with gold, which has surpassed the 50% level and now stands at 57%, as per data by market analytics firm Kaiko.
Bitcoin 30-day rolling correlation with gold has surged 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 down crypto-friendly banks, causing a banking crisis. As a result, investors have been turning to Bitcoin as a more reliable alternative to the yellow metal.
Crypto’s Rise As A Safe Haven Asset
Bitcoin has long been regarded as a risky investment due to its volatile price fluctuations and lack of regulatory oversight. However, in recent years, it has emerged as a safe haven asset for investors seeking a hedge against traditional market risks.
Unlike fiat currencies and other traditional assets, Bitcoin operates independently from central banks, making it less vulnerable to inflation and government interference.
Moreover, Bitcoin’s decentralized nature provides investors with greater control over their assets and reduces their exposure to systemic risks.
With the ability to store and transfer wealth across borders without the need for intermediaries, Bitcoin offers a level of financial freedom and security that is 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 whims of government policies or macroeconomic factors.
As a result, Bitcoin has gained increasing recognition as a safe haven asset, particularly in times of 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 those looking to diversify their portfolios and protect their wealth from external threats.
-Featured image from AndroidCure.com