eToro Highlights Bitcoin’s Correlation With Gold Nearing Its Highest Point In A Year
Bitcoin Correlation With Gold Near Its Highest Point In A Year
Back in late December 2018, a Wall Street Journal (WSJ) article suggested that Bitcoin has a high correlation with the traditional assets markets. At that time, citing data from the research firm Excalibur Pro Inc. it has been reported that the flagship cryptocurrency has been trading at 0.84 correlation to gold over a period of five days.
Here, a correlation of +1 indicates a perfect correlation while -1 a complete inversion.
Since December 2018, this correlation according to the data provided by Coinmetrics has been constantly moving upwards, hitting the highest level in March. Now, in its latest market update, Mati Greenspan, the senior analyst at eToro shared that this correlation is now near its “highest point” in about a year.
Source: Coin Metrics
However, this correlation he says is still less than 0.15 that practically means there isn’t any “meaningful” correlation.
In the past 10 years, Bitcoin has gone through various bull and bear cycles and is currently in the longest bear cycle in its history ever that began after hitting $20k in December 2017. If we take a look at the gold price, it hit its highest point in late 2011 at around $1800 USD/oz. After remaining bullish to the most part of 2012, from around $1,750, it took a drop and in the last 6 years, the gold price hasn’t managed to cross the $1,360 level.
Can Bitcoin Beat Gold
As we previously reported, the decline in the new findings of physical gold can lead its prices to surge. However, the origins of gold have been discovered in the space by scientists that could put a kibosh on this price rise in the future.
By that standard, Bitcoin could outpace Gold very easily as it has a limited supply of 12 million BTC that is to be ever mined. Moreover, if we draw a comparison between the two, Bitcoin outperforms Gold when it comes to being portable, verifiable, divisible, scarce, and censorship-resistant while gold has an established history and more durable and fungible than BTC.
Now, if some experts are to be believed, the leading cryptocurrency Bitcoin will be surpassing the $7 trillion market cap of the popular yellow metal in the coming years.
Mike Novogratz, the CEO, and founder of Galaxy Digital recently joined Anthony Pompliano of Morgan Creek to discuss this where the Bitcoin bull said BTC can easily reach gold’s market cap over the course of next 20 years.
Though it would mean, a 100x rise from the current price around $4k, Novogratz says investors shouldn’t expect this in the next year or two as it's a long term goal.
Is this $7 trillion market cap possible for Bitcoin to achieve? According to the crypto analyst, Dave the Wave, it can definitely happen.
Recently, Garrick Hileman, the head of research at Blockchain and research associate at the London School of Economics also said,
“The main use for bitcoin today is as digital gold. The question is though, who will be buying digital gold? If central banks start to accumulate bitcoin, that could be hugely impactful on bitcoin's price.”