Has Bitcoin (BTC) found its place as a safe haven in the midst of a severe crisis of confidence in the banking sector? Yes, if you believe its correlation with gold, which is at a high at the moment. What does this mean for BTC?
Bitcoin is trading alongside gold right now
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, it is the yellow metal that 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’ve seen, the banking system has been undergoing a crisis of confidence in recent months, as major banks have collapsed. This week, it is the First Republic Bank that has fallen on the stock market, and that could end up in bankruptcy. Faced with the risk of a new bank run, mistrust is only growing.
Over the same period, gold has shown a particular form, without surprise. 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 suffered a very sharp drop, as it touched $30,000 again. The queen of cryptocurrencies, however, 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 help trigger the next bull run.
*** Translated with www.DeepL.com/Translator (free version) ***