Bitcoin’s claim for being digital gold appears to have another piece of evidence in its corner. In a day where global stocks plunged on concerns over the impact of the deadly coronavirus, the largest cryptocurrency gained as much as 5.8% while gold rose as much as 1.1%.
Of course, one day of trading does not a safe haven make. Critics of the assertion, or some would say mantra, that bitcoin is a digital analogue to the precious metal could rightly point to a falling short-term correlation between the two assets throughout the fourth quarter of 2019. As bitcoin’s price fell from more than US$12 000 a coin last summer to less than $7 000 in the spring, gold rallied by about 20%.
But since the beginning of the new year, the two assets’ 60-day correlation has flipped from negative to positive. The correlation coefficient now stands at 0.21, up from a low of negative 0.15 in December, and above the trailing one-year daily average.
Don’t care for statistical analysis? Well then take a look at how the cryptocurrency performed on another tumultuous day this year. Bitcoin and gold moved in tandem in the hours after Iran retaliated with a missile strike against the US for the killing of General Qassem Soleimani. — Reported by Brandon Kochkodin, (c) 2020 Bloomberg LP