Bitcoin, a digital currency once considered an unstable investment, has found a surprising ally in the form of an ancient commodity: gold.Since March, the correlation between alpha cryptocurrencies and precious metals has steadily increased, providing investors with a safe haven to cope with the ongoing banking crisis and rising interest rates
Bitcoin, a digital currency once considered an unstable investment, has found a surprising ally in the form of an ancient commodity: gold.
Since March, the correlation between alpha cryptocurrencies and precious metals has steadily increased, providing investors with a safe haven to cope with the ongoing banking crisis and rising interest rates.
But what is driving this unexpected partnership between Bitcoin and gold, and how long can this partnership last?
Bitcoin outperforms gold in the banking crisis
As the banking crisis continues to impact the financial world, investors are using Bitcoin as a safe haven for their funds. In fact, many people choose cryptocurrencies over traditional safe haven assets such as gold because of their higher returns and stability.
The current trading price of BTC is close to the psychological level of $28936, which has increased by 3% in the past 24 hours and is impressive. According to market analysis firm Kaiko, the surge in demand for Bitcoin is due to its increasing correlation with gold, which has exceeded the 50% level and is currently 57%.
The correlation between digital currency and gold has been steadily increasing since March, when regulatory authorities shut down cryptocurrency friendly banks, triggering a banking crisis. Therefore, investors have always regarded Bitcoin as a more reliable alternative to gold
The Rise of Cryptocurrency as a Safe haven Asset
Due to sharp price fluctuations and a lack of regulation, Bitcoin has long been regarded as a venture capital. However, in recent years, it has become a safe haven for investors seeking to hedge against traditional market risks.
Unlike fiat currency and other traditional assets, Bitcoin operates independently of central banks and is therefore less susceptible to inflation and government intervention.
In addition, the decentralized nature of Bitcoin provides investors with greater control over their assets and reduces their risk of systemic risk.
Due to the ability to store and transfer wealth across borders without the need for intermediaries, Bitcoin provides a level of financial freedom and security that traditional assets cannot match.
Its limited supply and digital scarcity also make it a tool for hedging inflation, because its value is not affected by government policies or macroeconomic factors.
Therefore, Bitcoin is increasingly recognized as a safe haven asset, especially during periods of economic uncertainty and market volatility.
It provides investors with a reliable and secure storage of value, making it an attractive choice for those who want to diversify their investment portfolio and protect their wealth from external threats.
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