Correlation Between Bitcoin And Gold Widens To Reach Its Largest Margin In Over A Year
Correlation Between Bitcoin And Gold Reaches Its Largest Spread In Over A Year
Gold has been performing in a different way compared to Bitcoin (BTC) in the last few days. Bitcoin continues to expand and grow while gold is down 6 percent since February. This shows that in the last weeks, these two assets are inversely correlated.
Bitcoin And Gold Operate In Different Directions
According to a recent article released by CoinDesk, the 90-day correlation coefficient between Bitcoin and gold is currently -0.71. This is the lowest level since March 20. This shows that there is a significant inverse correlation between these two assets.
Gold was close to reaching $1,300 at the end of December, while Bitcoin moved from $6,000 to $3,150 in just a few days since November 14, 2018. Although these assets are inversely correlated, this does not mean that there is a mutual influence. Indeed, this does not necessarily mean causation.
Back at the end of 2018, gold experienced a rally that could be closely related to the US dollar weakness that was caused by speculation around the Federal Reserve. At that time, investors expected the FED to pause interest rate hikes during 2019. Moreover, Bitcoin fell during this period of time because of the hard fork experienced by Bitcoin Cash (BCH) in which Bitcoin SV (BSV) started a hash war. At that time, Bitcoin was traded close to $3,150.
Gold is currently operating 5.5% down from February and each ounce can be purchased for $1,270. Meanwhile, Bitcoin surged in April from $4,200 to $5,850 a few hours ago. Thus, there is now a strong inverse correlation with the precious metal.
According to CoinDesk, gold is currently developing a bearish market structure called “Head and Shoulders” reversal pattern. This could increase the pressure on the downside for gold. Meanwhile, Bitcoin is currently being traded around $6,000. This is a very important price for the digital asset that worked as support throughout 2018 and that will clearly be working as resistance in the near future.