The digital currency Bitcoin(BTC) which at once was considered as a risky investment subjected to high market risks, has recently found a remarkable ally in the embodiment of age-old commodity : Gold
Ever since March 2023, the interrelationship between alpha crypto Bitcoin and the evergreen Gold has regularly enlarged, and have provided investors with a refuge in spite of advancing banking crises and increasing interest rates.
Let’s now look into the causes that are driving this unanticipated partnership between Bitcoin and Gold and how long it shall last.
Bitcoin defeats gold in the midst of banking crisis
As the banking crisis carries on to rock the monetary world, investors are concentrating on Bitcoin as a safe haven for their money. As a matter of fact, countless choose crypto over the classical refuge asset, gold, because of its inflated returns and escalated stability.
Pronto trading near the $30,000 psychological level at $28,936, BTC has observed a magnificent rally of 3% in the last 24 hours. This escalation in demand for Bitcoin is due to its rising correlation with gold, which has outshined the 50% level and now stands at 57%, as per data by market analytics firm Kaiko.
This independence between the digital currency and gold has been steadily rising since March, when regulators shut down crypto-friendly banks, causing a banking crisis. As a result, demand for Bitcoin has increased among investors as a more authentic substitute to the yellow metal.
Bitcoin’s escalation as an asset of refuge
Bitcoin since long has been tagged as a volatile investment due to its volatile price fluctuations and lack of regulatory supervision. Nevertheless, over the past few years, it has surfaced as an asset of refuge for investors seeking a hedge against traditional market risks.
On the contrary to fiat currencies and other traditional assets, Bitcoin operates unaided from central banks, making it reduced to vulnerability of inflation and government intervention.Moreover, Bitcoin’s decentralized nature provides investors with greater control over their assets and reduces their exposure to systemic risks.
With the ability to store and transfer wealth across borders without the need for intermediaries, Bitcoin offers a level of financial freedom and security that is unmatched by traditional assets. Bitcoin’s finite supply and digital scarcity also make it a safety valve against inflation, as its value is not subject to the whims of government policies or macroeconomic factors.
As a result, Bitcoin has gained increasing recognition as a safe haven asset, particularly in times of economic uncertainty and market volatility. Its potential to provide investors with a reliable and secure store of value has made it an attractive option for those looking to diversify their portfolios and protect their wealth from external threats.