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Bitcoin is diverging from precious metals: Is it a signal of a rise?

  • Bitcoin, the world’s largest cryptocurrency by market value, has been increasingly diverging from important asset classes in the TradFi world in recent months.
  • With the institutional interest turning towards cryptocurrencies, the rising “digital gold” Bitcoin has gained 22% in the past two weeks, while its real-world counterpart experienced a 2.3% decrease during the same period.
  • An interesting aspect of the price trend was BTC’s appreciation alongside gold and silver after the US banking crisis in March, indicating a strong correlation.

With the recent rally in Bitcoin’s price, BTC is diverging from Gold and Silver and moving towards becoming an independent asset.

Bitcoin is Diverging from Precious Metals

Bitcoin (BTC)

Bitcoin, the world’s largest cryptocurrency by market value, has been increasingly diverging from important asset classes in the TradFi world in recent months. According to on-chain analytics firm Glassnode, BTC’s 30-day correlation with precious metals such as gold and silver has dropped to -0.78 and -0.9, respectively.

bitcoin-30d-correlation

This inverse relationship means that when BTC’s price rises, the gold market tends to decline, and vice versa.

As BTC Rises, the Gold Market Shows a Decline

Analyzing the recent price movements of these three assets shows that the digital asset and real-world assets are moving independently.

With the institutional interest turning towards cryptocurrencies, the rising “digital gold” Bitcoin has gained 22% in the past two weeks, while its real-world counterpart experienced a 2.3% decrease during the same period. Meanwhile, silver has experienced a decrease of more than 5%.

An interesting aspect of the price trend was BTC’s appreciation alongside gold and silver after the US banking crisis in March, indicating a strong correlation. However, the latest developments have shown a clear divergence.

bitcoin-price-in-commodities

Bitcoin Has Become an Independent Asset Class

This indicates that the market may start to prefer BTC over gold as a hedge against inflation. This could further strengthen the narrative of BTC as a long-standing safe haven asset.

Critics may argue that BTC’s detachment from gold results in it resembling stocks more based on historical trends, but the reality is quite different.

According to a recent report by crypto market data provider Kaiko, BTC’s correlation with the Nasdaq 100 index has reached its lowest level in three years in June, indicating a significant divergence from traditional risk assets.

kaiko-bitcoin-correlation

It is clear that BTC is seen as an independent asset class with its own fundamentals, rather than being affected by adverse conditions in the real world.

However, considering the increasing mainstream adoption of cryptocurrencies, especially BTC, maintaining this status in the long term will be a challenging task.

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Lucien Renard
Lucien Renardhttps://en.coinotag.com/
Lucien Renard is a 24-year-old writer specializing in cryptocurrency analysis and price action. With a focus on technical analysis, Lucien provides valuable insights into market trends and potential opportunities for investors.
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