New Data Shows Bitcoin And Gold Are Not That Correlated

The classification of Bitcoin has been a controversial and difficult topic for cryptocurrency enthusiasts and many investors so far, but also regulators who have been finding it hard to reach a consensus so far. The digital asset has been compared to a currency many times, as well as a commodity, an investment asset or even something that has no underlying value. However, the most common association of BTC is with gold and new data shows that both of the assets are not that correlated.

In fact, there have been a lot of times when Bitcoin has been referred to as “the new gold” or “digital gold.” This week, as the tensions between the United States and Iran strengthened up, gold reached a 6-year high while the price of BTC rose about 20%. Thus, analysts have still been trying to re-evaluate to what extent commodities and other traditional assets are linked to Bitcoin and its short and long term price action.

When looking at the price action of the most dominant coin in the cryptocurrency news from April 2013 until now, we can see that gold reached its peak in 2020 while Bitcoin reached its maximum price in late 2017. And if you are wondering how they are related, well…

As new data shows Bitcoin and gold are not that related, their price correlated from April 2013 to December 2019 a lot of times. The correlation level is 46.5% between both assets – and has been at a high of 60.3% in 2018 as well as a 70.8% in 2019.

The correlations between lagged gold prices and Bitcoin prices also show similarities.  Over the last week, gold surged to a record high at $1,606 per ounce and gold futures prices and volatility has also increased. At the same time, the Bitcoin rally above $8,300 represents its highest price since November 2019.

The new data shows Bitcoin and gold are not that much correlated, especially when it comes to their returns. Both asset’s prices have only a 2.2% relationship for the full sample studied. However, one can clearly see that the increase in BTC and gold price correlation has increased from 2018 (8.7%) to 2019 (12.5%).

In times when the Bitcoin classification remains an open question, we can see that commodities such as oil and gold are always in the Bitcoin price news and perform in similar fashion as the largest digital asset. On wider timeframes, though, the data shows that there isn’t much correlation between the leading cryptocurrency and gold and oil.