Bitcoin’s gold correlation is approaching its all-time high after an ETF approval that will make it more accessible to Wall Street investors.
In 2024, Bitcoin and Gold decided against charting different courses. The all-time correlation between the number #1 blockchain asset and one of the best commodities is 0.79 (79%). We are not there yet, but both are poised to establish a tighter connection.
Read More: Bitcoin Critically Fell After the ETF Approval. What’s Next?
The last time when the two stores of value had a tight concurrence was during the recovery period after 2020. Once again, and at a time when bullish sentiments have overwhelmed the market, the relationship between the two is nearing historic levels.
For investment assets that have fluctuated at different levels throughout history, a striking correlation is like finding a missing sock in the laundry.
At 0.76, the Bitcoin-Gold correlation is only a few decimals to 1. 1 implies that both assets are moving in the same direction, while a -1 suggests they’re moving in opposite directions. However, attaining that 1 has remained more than elusive, like hitting the eye in archery.
Bitcoin’s correlation to Gold started rising towards the close of 2023. The event coincided with central banks in the U.S hiking their interest rates. Meanwhile, the relationship between Bitcoin and U.S equities was marking its third consecutive year at all-time lows.
One would think the Bitcoin – S&P500 correlation had been spending its time at a Caribbean beach enjoying a 3-year vacation.
At the same time, the ETF seems like Bitcoin’s watershed moment to steal the spotlight from convectional assets and, perhaps, even become one of them. As if that weren’t sufficient, Bitcoin is on its way to enticing Gold to its side, seemingly making a charming play for the correlation that’s been playing hard to get.
The current 76% Bitcoin-Gold correlation is trailing the 79% all-time high by a few points, suggesting Bitcoin’s gradual transformation into a mainstream financial asset.
The above chart represents the Bitcoin – Gold ratio, a metric that divides the price of Bitcoin by Gold’s price. This metric usually represents the number of gold ounces you can purchase with one Bitcoin.
When the correlation between Bitcoin and Gold peaked, it wasn’t just breaking records but practically giving gold a run for its money. The Bitcoin-Gold ratio also peaked at an impressive all-time high. On the above chart, the all-time high illustrates that 1 BTC could purchase 22.5 ounces of gold.
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- Bitcoin Has Gained Legality Within Honduras
As Bitcoin continues to exhibit select properties of traditional financial instruments, Investors are sneaking around for stable ground. Besides, there comes a time when every decent man hits the hay with their sneaky link and enters a stable relationship.
2024 will go down in history as the year when Bitcoin warmly embraced Wall Street investors on a January and sang them Beyonce’s Halo.
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