Discover the relationship between Bitcoin and Gold during market turbulence and macroeconomic uncertainty. Is Bitcoin the new digital gold?
In times of market turbulence or challenging macroeconomic conditions, “store of value” assets like Bitcoin and Gold have historically been seen as safe haven investments. Bitcoin is frequently referred to as “digital gold,” and with good reason—it is thought of as the digital equivalent of the traditional gold bar. We will do our best to determine the nature of the relationship between these two assets and whether they are indeed correlated with one another.
Bitcoin and Gold’s link in terms of correlation
After Silicon Valley Bank failed, market uncertainty and fear increased, and Bitcoin and gold seem to be heading together.
Lehman Brothers’ failure on September 15, 2008, and the subprime mortgage crisis destroyed the global economy.
Investors and savers suffered the most when a dishonest financial system destroyed lifetime sacrifices.
Gold was soaring, and Bitcoin was going public as a decentralized exchange currency that could function outside of conventional finance.
Bitcoin is a major reserve asset but not a widespread currency due to its high transaction costs and difficulty.
The Lightning Network might make Bitcoin a trade currency, but that’s another story.
Bitcoin is “digital gold,” performing the same goals as gold in a decentralized form.
BTC, like the most famous commodity asset, had a good first quarter of 2023, while the stock market lagged behind.
Bitcoin rose 82% from $16,500 to $30,000. Since the start of the year, gold has risen 9.3% from $1823 per ounce to $1993, nearing all-time highs.
According to Glassnode’s on-chain statistics, the two assets’ prices have correlated over the past year.
In Nigeria, more people search for “Buy Bitcoin” than “Buy Gold” on Google
Bitcoin is more valued in countries with high poverty and no strong national currency to support citizens’ economic needs.
El Salvador and other emerging nations have adopted Bitcoin’s decentralized philosophy as their official currency.
Regarding this, El Salvador recently adopted a plan to eliminate the inherent VAT on all technology advancements, including Bitcoin.
Nigeria is another nation whose national currency is struggling to withstand the effects of inflation.
The value of the Nigerian Naira relative to the Euro has decreased by more than half as of June 2016.
Nigerian savers have grown interested in safe-haven commodities like gold and bitcoin due to the depreciation of their currency.
According to Google Trends, Central Africans appreciate Bitcoin more than gold: in 2016, “Buy Bitcoin” was searched more than “Buy Gold.”
Is the bear market gone for bitcoin?
Gold is approaching new price highs, while bitcoin hovers between its bottom from the past market cycle, about $15,500, and its high from the previous bull cycle, $69,000.
Many are confused if the bear market is gone or if the most popular cryptocurrency will have to drop again due to price adjustments.
The outcome depends on the US economy, which appears to be lurching between recession and market resurgence.
US goods prices rose less than predicted (+0.1% vs. +0.2%) in March, suggesting that inflation has stabilized.
This means that when the Fed finishes slowing the economy in 2024, inflation may be under control and markets may continue rising.
As we return to Bitcoin, stablecoin holdings on cryptocurrency exchanges are falling dramatically, a promising sign for the immediate future.
When stablecoin exchange reserve quantities dropped to $2 billion in countervalue, the last bull market started.
Another noteworthy on-chain data item is the BTC profit-to-loss ratio.
In 2023, 6.2 million BTC profited, supporting the bull market.
Simply said, many coins below $30,000 act as support, making it harder to break that level and relapse to a bear market.