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,