The correlation between digital and physical gold has almost doubled in the past three months, fresh data from Bloomberg revealed on August 7.
The statistics reveal that while the correlation between Bitcoin (BTC) and gold over the past year was at 0.496, in the past three months this has almost doubled to hit 0.837 — where a coefficient of +1 indicates perfect correlation, and -1 complete non-correlation.
58% lockstep since May
Bloomberg notes that over the past year, the correlation between the assets has been random: with the two assets trading inversely 49% of the time, in a correlated downturn 22% of the time and in a correlated uptrend 29% of the time. Yet since May 8 of this year, their trading in tandem has surged to 58%.
The article notes the caveat that 3 months is a relatively minor data set, as well as the fact that correlation does not imply causation. Moreover, its author argues that stablecoin Tether (USDT) — rather than purely market forces — has a significant impact on the price of Bitcoin and the liquidity of crypto markets.
Correlation between Bitcoin and gold, YTD and 3 months. Source: Bloomberg Opinion
Nonetheless, the present geopolitical and macroeconomic climate plays into a possible interpretation of the data. The article notes the adverse impact of escalating trade tensions between the United States and China on the world economy — against which, as investor Tim Draper argued earlier this week, Bitcoin can offer a “remarkable hedge.”
The safe-haven asset of the digital age
Mounting recognition of Bitcoin as a safe-haven asset is being spurred by the relevance of its non-sovereign characteristics amid an unpredictable geopolitical backdrop. The coin is “doing exactly what it's designed for today,” cryptocurrency and blockchain lawyer Jake Chervinsky argued earlier this week.
Jeremy Allaire, CEO of crypto payments firm Circle, has this week said that macroeconomic turmoil is driving the price appreciation of Bitcoin as “a non-sovereign, highly secure mechanism to store value that can exist anywhere the internet exists.”
Macro factors — including central banks’ dovish policy turn — have also been cited in relation to Bitcoin’s bullish price performance by various analysts in recent weeks.
While this broad sentiment has been recently echoed by Morgan Creek Digital Assets founder Antony Pompliano, he conversely noted that Bitcoin’s unique value might be best preserved if it preserves its “non-correlation to the rest of the markets, especially in times of global instability.”