Bitcoin added 9% since the weekend in a move that briefly returned it above the $9,000 level. The wider crypto markets have also benefited with over $20 billion flowing back into to total capitalization.
Yes, the move coincided with worsening news over the Coronavirus outbreak but to claim that the virus is ‘good for Bitcoin’ is just downright irresponsible journalism.
What has actually happened is that Bitcoin has cemented itself among the traditional investments as a store of value.
Two completely unrelated incidents this year have resulted in buying pressure on BTC and gold at the same time.
Bloomberg noted the correlation in a recent report regarding the falling stock markets led by a selloff in Asia, the region most affected by the epidemic.
It did add, though, that the second half of 2019 saw an inverse correlation as gold rallied to tap a six year high while Bitcoin corrected around 50% from its mid-year peak.
This year however has been the opposite with the correlation flipping to positive and the coefficient now standing at 0.21, up from a low of -0.15 in December, and above the trailing one year daily average.
The article overlaid a couple of charts to show how the two assets were correlated during the Iranian tensions earlier this month.
Crypto analysts are also making similar comparisons with one noting similarities in technical indicators for both assets.
Bitcoin’s fear and greed index is currently smack in the middle of neutral territory at 50.
According to the charts gold prices touched $1,585/oz yesterday and are on their way to $1,600. The two largest movements this year correlate with the two incidents that also drove Bitcoin rallies.
Gold is now up over 20% over the past year and, according to CNN, could top $2,000 again in the not too distant future.
The last time gold hit an all-time high was in the midst of the European debt crisis in 2011 when it topped $1,900.
Other reports are warning of a possible correction for gold as it has made solid gains this year and Januarys are usually bullish for precious metals.
The test for both gold and Bitcoin will be if they rally in tandem again the next time major economic or geopolitical news breaks.
This will confirm the notion that Bitcoin truly is a safe haven asset now, regardless of what the mainstream media thinks of it.
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