Bitcoin, often referred to as the “digital gold,” has established itself as a unique asset class and a reliable store of value over the years. While gold has a longer history than BTC, both assets are commonly used by investors as a hedge against economic instability and inflation.
Interestingly, there has been a consistent positive correlation between Bitcoin and gold, limiting diversification opportunities for investors. However, recent data suggests that the premier cryptocurrency and the precious metal have been decoupling from each other in recent weeks.
In a recent Quicktake post on the CryptoQuant platform, an analyst known as Darkforst discussed the evolving relationship between the price of Bitcoin and gold. According to the analyst, there is a noticeable decoupling between the crypto market leader and the gold market.
Correlation is a metric that measures the degree of association between the price movements of two specific assets. A positive correlation indicates that the assets are moving in the same direction, with a value closer to 1 signifying a stronger correlation. On the other hand, a correlation value less than 0 suggests a negative correlation, meaning the assets move in opposite directions.
While the gold market has been performing well recently, the price of gold has seen a decline in the past few weeks. In contrast, Bitcoin has experienced a strong bullish momentum in November, reaching successive all-time highs in recent weeks.
This divergence in performance has led to the correlation between the price of Bitcoin and gold slipping below zero, entering negative territory. Darkforst believes that this decoupling could benefit BTC by triggering a “liquidity shift” and attracting more capital into the flagship cryptocurrency.
As of the latest data, the price of BTC is around $98,000, showing a slight decline of almost 1% in the past 24 hours. However, the cryptocurrency’s performance over the weekly timeframe remains impressive, with a gain of over 7% in the last seven days.
Overall, the decoupling of Bitcoin from gold presents new opportunities for investors looking to diversify their portfolios. With Bitcoin’s price showing resilience and gold facing recent price declines, the cryptocurrency may attract more capital as investors seek alternative stores of value. As the correlation between Bitcoin and gold continues to evolve, it will be interesting to see how these two assets perform in the future.
