Bitcoin has been called ‘digital gold’, but does this mean the two markets behave similarly? This relationship has been top of mind for industry observers for some time, as media coverage has often championed the idea bitcoin is a new ‘ safe haven ‘ asset.
But while some market observers have claimed there is a correlation between bitcoin and gold, members of the digital currency trading community disagree. Further, some have collected data they believe shows this relationship is speculative at best.
Though bitcoin and gold have frequently displayed a notable correlation during times of macroeconomic crisis , this relationship has often broken down once market conditions return to normalcy.
Tim Enneking, chairman of cryptocurrency investment manager EAM, for example, told CoinDesk: "There is actually very little correlation when you factor out geopolitical events that drove prices for everything up or down." Gaining meaningful insight into the relationship between bitcoin and gold requires looking into market correlation, he asserted.
"When overall market correlation is high, so is the correlation for this pair, at least recently," he stated. "When overall correlation is low, so is the correlation between these two."
Petar Zivkovkski, director of operations for bitcoin trading platform Whaleclub , went a step further, stating that his firm has yet to detect any "significant statistical correlation" between bitcoin and gold.
He added: "Any direct or inverse correlation over a set period of time is, in our opinion, purely coincidental." Assertions like these could pour cold water over the hopes of many market participants who want the two assets to correlate reliably. Analysis of correlation
While the price movements of bitcoin and gold are open to interpretation, having greater insight into the relevant market data can help readers develop more well-informed points of view.An analysis of historical market data conducted by ARK Invest’s Chris Burniske failed […]
