Has Bitcoin (BTC) found its place as a safe haven at a time when the banking sector is undergoing a marked crisis of confidence? Yes, if we believe its correlation with gold, which is at its highest at the moment. What does this mean for BTC?
Bitcoin is trading alongside gold at the moment
As a reminder, correlation is when the price movements of two assets move together – this suggests that they are influenced by the same things, or influence each other. According to analysts at Kaiko Data, this correlation between Bitcoin and gold has peaked recently, and is part of a clear progression:
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
“Bitcoin’s 30-day correlation with gold has broken through since March, and now stands at 57% – its highest level in almost two years. “
What this suggests is that Bitcoin is seen more as a “safe haven” – a haven for investors to take refuge in when financial markets are uncertain. Historically, the yellow metal has fulfilled this role for millennia now. This is not the first time that the role of Bitcoin and gold have been lumped together, with the largest cryptocurrency increasingly used as a reserve asset.
The global context in question
As we have seen, the banking system has been undergoing a crisis of confidence in recent months, as major banks have collapsed. This week, it was First Republic Bank that fell on the stock market, and could find itself bankrupt. Faced with the risk of another bank run, mistrust is only growing.
Over the same period, gold has, unsurprisingly, performed particularly well. The yellow metal tends to attract worried investors in times of uncertainty. For its part, the dollar is also suffering from a lack of confidence: in Asia, people are now seeking to detach themselves from American hegemony, and China is banking heavily on its digital yuan.
A weakened banking system, a less hegemonic dollar, inflation… These signs of instability seem to benefit Bitcoin… To a certain extent? Yesterday, the price of BTC plummeted sharply as it touched $30,000 again. However, the queen of cryptocurrencies seems to be recovering in recent hours.
So what we’re seeing is that after two particularly crucial years for the ecosystem, Bitcoin is apparently attracting interest from investors looking for diversification. It’s a trend that could trigger the next bull run