HomeTodays NewsWhy Bitcoin Ditching Stock Market Correlation For Gold Is Bullish for BTC
Why Bitcoin Ditching Stock Market Correlation For Gold Is Bullish for BTC
July 30, 2020
Bitcoin price this week exploded from its tightening consolidation range and within a day, broke through resistance at $10,000 and touched $11,400. The breakout followed gold setting a new record, rather than staying lock and step with stocks as the crypto asset has as of late.
Comparison charts show that the leading cryptocurrency by market cap may have ditched its correlation with the S&P 500 in favor of the soaring precious metal. If this is the case, this will benefit the entire crypto space – here’s why.
The dollar dumping, as a result, sent safe haven assets like precious metals soaring as more money supply poured into the already flooded market.
The latest round of stimulus adds another $1 trillion to the Fed’s balance sheet, prompting investors to flock toward assets that could act as a hedge against the expected inflation. Bitcoin has been recently called the “fastest horse in the race against inflation” by billionaire hedge fund manager Paul Tudor Jones.
In this latest shakeup in the dollar, not only did gold benefit but so did Bitcoin. In fact, Bitcoin more closely followed gold’s reaction to the continued printing of money supply than it did to the stock market.
Stocks, crypto, and even precious metals collapsed. All markets rebounded sharply, but none of them have performed as well as gold. And as of this past week, Bitcoin.
The crypto asset’s correlation with the stock market has held Bitcoin back for several weeks. It has also acted as an ominous dark cloud hanging over the industry, where a second-leg down scenario in stocks could have led to a lower low in crypto.
It’s not just BTC suddenly correlating more closely with gold, altcoins and silver are showing a shockingly similar chart pattern. Could altcoins be proving to be the silver counterpart to Bitcoin as digital gold?
The more these crypto assets join the safe haven conversation alongside precious metals, the narrative for the next bull market could be right under our noses.