A strong dollar and rising Treasury yields have given bitcoin and gold something in common price-wise: both assets have fallen this year.
Gold GC00,
traditionally considered a safe-haven asset, has lost nearly 7% year-to-date, according to Dow Jones Market Data. BitcoinBTCUSD,
has fallen nearly 60% since the start of the year, according to data from CoinDesk.
Although some bitcoin proponents have touted the cryptocurrency as an inflation hedge and as “digital gold,” the two assets have been largely uncorrelated, with their correlation mostly fluctuating between minus 0.2 and plus 0. 2 most of the time over the past year, according to data from Kaiko Research.
Or at least until recently when their correlation recently topped 0.36, a more than a year high, according to Kaiko.
A correlation of 1.0 means that an asset pair is moving in perfect sync, while a correlation of zero means that there is no relationship between the price movements.
Bitcoin’s correlation with gold recently hit a yearly high.
Kaiko Search
In comparison, the correlation between bitcoin and the S&P 500 SPX,
sits above 0.6, according to data from Coin Metrics, as the crypto mostly trades in tandem with other risky assets.
Still, the rally in the US dollar has weighed on both gold and bitcoin lately, as the precious metal is denominated in dollars, while the majority of bitcoin trading is against the greenback. “The dollar has attracted a lot of capital looking for a safe haven,” Kaiko analyst Dessislava Aubert said in an interview. Last week, the ICE US Dollar Index DXY,
an indicator of the currency’s strength against a basket of major rivals, hit its highest level since 2002.
Rising Treasury yields also hurt both assets. Some investors sold risky assets, including crypto. Meanwhile, “in the face of rising interest rates, gold’s appeal is diminished along with its lack of yield,” Rupert Rowling, market analyst at Kinesis Money, wrote in a Monday note.
The yield on the benchmark 10-year Treasury bond TMUBMUSD10Y,
was 3.7% on Monday, after briefly hitting 4% last week, the highest level in more than a decade, according to Dow Jones Market Data.
A strong dollar and rising Treasury yields have given bitcoin and gold something in common price-wise: both assets have fallen this year.
Gold GC00,
traditionally considered a safe-haven asset, has lost nearly 7% year-to-date, according to Dow Jones Market Data. BitcoinBTCUSD,
has fallen nearly 60% since the start of the year, according to data from CoinDesk.
Although some bitcoin proponents have touted the cryptocurrency as an inflation hedge and as “digital gold,” the two assets have been largely uncorrelated, with their correlation mostly fluctuating between minus 0.2 and plus 0. 2 most of the time over the past year, according to data from Kaiko Research.
Or at least until recently when their correlation recently topped 0.36, a more than a year high, according to Kaiko.
A correlation of 1.0 means that an asset pair is moving in perfect sync, while a correlation of zero means that there is no relationship between the price movements.
Bitcoin’s correlation with gold recently hit a yearly high.
Kaiko Search
In comparison, the correlation between bitcoin and the S&P 500 SPX,
sits above 0.6, according to data from Coin Metrics, as the crypto mostly trades in tandem with other risky assets.
Still, the rally in the US dollar has weighed on both gold and bitcoin lately, as the precious metal is denominated in dollars, while the majority of bitcoin trading is against the greenback. “The dollar has attracted a lot of capital looking for a safe haven,” Kaiko analyst Dessislava Aubert said in an interview. Last week, the ICE US Dollar Index DXY,
an indicator of the currency’s strength against a basket of major rivals, hit its highest level since 2002.
Rising Treasury yields also hurt both assets. Some investors sold risky assets, including crypto. Meanwhile, “in the face of rising interest rates, gold’s appeal is diminished along with its lack of yield,” Rupert Rowling, market analyst at Kinesis Money, wrote in a Monday note.
The yield on the benchmark 10-year Treasury bond TMUBMUSD10Y,
was 3.7% on Monday, after briefly hitting 4% last week, the highest level in more than a decade, according to Dow Jones Market Data.
