The Bank of America’s strategists see significant benefits for gold from the current Bitcoin [BTC] situation.
At the time of publication, Bloomberg reported that the correlation between Bitcoin and gold for the previous 40 days was 0.50. In August, this number was zero.
Relationship between Bitcoin and Gold
Bank of America’s experts have observed that while Bitcoin’s connection with gold has been growing, its correlation with the S&P 500 and Nasdaq 100 has been flat. Currently, the values were 0.69 and 0.72.
As per the strategists, “A decelerating positive correlation with SPX/QQQ and a rapidly rising correlation with XAU indicate that investors may view Bitcoin as a relative safe haven as macro uncertainty continues and a market bottom remains to be seen.”
So, why does this figure bode well for Bitcoin?
When the economy is unstable, investors tend to move their money into safer assets. Most investors prefer to put their money into real estate or gold.
Gold has emerged as a safe haven amid real estate inflation. Because of this, there is a strong relationship between it and Bitcoin. There is a good chance that the most well-known cryptocurrency will be seen as an alternative investment.
The prognosis of the strategists coincides with recent statements made by Mike Novogratz, CEO of Galaxy Digital.
At a conference for high net worth investors on October 20th, Bitcoin was called the “canary in the coal mine” by investor and entrepreneur Mike Novogratz.
Correlation at yearly high
Earlier this month, Kaiko Research stated that the relationship between Bitcoin and gold was stronger than ever before.
The company came to this conclusion after studying macrotrends. Among other things, the rise in correlation was blamed on the United States’ Federal Reserve’s frequent interest rate hikes and the dollar’s strength against other fiat currencies like the British pound and the Euro.
The price of one king coin as of the 21st of October, according to data compiled by CoinMarketCap, was $19,183, an increase of 1.20 percent from the previous week. Its market capitalization was $368 billion, and $28.5 billion changed hands in a day.