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BTC's Correlation With Gold Reached Its Highest Level in Over a Year

The correlation of well-known cryptocurrencies like Bitcoin (BTC) with well-established asset classes has long been a topic of study for traders and investors, particularly the recent increase in the correlation of Bitcoin with gold.

04-Oct-2022 By: Rohit Tripathi
BTC's Correlation Wi

For a long time, traders and investors have 

studied the correlation of prominent cryptocurrencies such as Bitcoin (BTC) with established asset classes, especially its recent growth in correlation with gold.

According to a report issued on October 3 by a crypto market analytics firm, the correlation of Bitcoin with gold hit its highest level in more than a year last week.

Outside factors affecting prices

The authors of the report noted that both the flagship digital asset and the precious metal have declined significantly this year:

“After gaining considerably from the Russia-Ukraine issue in Q1, gold has regained all of its gains and is currently down 10% year to date. Bitcoin has also fallen by double digits this year, owing to global monetary policy tightening.”

Furthermore, despite core inflation staying continuously high, gold has failed to behave as a safe-haven asset, that is, an asset that is expected to keep or gain value during periods of economic crisis.

Bitcoin and gold vs. the dollar

Although the correlation between the two commodities had been minimal for most of the year, the platform indicated that the strengthening of the dollar is now negatively affecting both, boosting the correlation between the two:

“Over the last year, bitcoin has been mostly uncorrelated with gold, with a correlation varying between negative 0.2 to positive 0.2. However, as the US dollar continues to strengthen, weighing on both cryptocurrency and gold, the correlation between the two assets has shifted.”

Bitcoin price analysis

At the time of writing, Bitcoin price was trading at $19,900, up 4.54% on the day, while the worldwide crypto market cap increased by 3.05%. Nonetheless, the BTC price is still down 1.25% over the previous seven days.

According to CoinGabbar statistics, the largest cryptocurrency by this indication has a market worth of $382.48 billion at the time of writing.

At the same time, some experts predict positive momentum for Bitcoin if it breaks the resistance level of $20,100 - $20,340, while BTC supply on exchanges has fallen to a four-year low.

Read also: Bitcoin’s Price Most Likely To Surge Above $22,400

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