Bitcoin has long been referred to as the digital counterpart to the scarce physical asset and precious metal, gold. But could altcoins be the digital silver to Bitcoin as digital gold?
According to an incredibly bizarre correlation, altcoins are nearly perfectly tracking alongside silver, albeit across different timeframes. What exactly does this mean, and is this positive for altcoins?
Crypto Assets Show Strong Correlation To Precious Metals
The world is facing a new era of economic activity, and following the pandemic, it could take a decade or more for things to properly recover – if they do at all.
As investors feared the worst, first they cashed out of nearly every asset possible during the Black Thursday market collapse last March.
Since then, investors have been taking risks one again. And while the stock market has already made a strong recovery, its hard assets like gold, silver, Bitcoin, and altcoins that have grown the most.
Related Reading | Silver & Gold: Precious Metals Tapping New Highs Bodes Well For Bitcoin
Precious metals gold and silver have long been turned to during an economic downturn as a safe haven and hedge against inflation. Few assets have limited supplies that make the balance between supply and demand that much more delicate.
Gold and silver have been used for centuries as a trading instrument, a currency, in jewelry, and more. Due to the familiarity, there’s an added layer of trust with these assets compared to others. The general stability over the years has also made investors more comfortable parking capital in these safe-haven assets.
That same trust can be found in Bitcoin and most crypto assets by way of decentralization. The average person, however, doesn’t yet understand how this works to know to trust the relatively new asset class.
But because these assets all share the attributes, it may be causing the price charts to play out in a similar fashion.
Are Altcoins The Silver To Bitcoin As Digital Gold?
While it’s long been thought that Bitcoin was the perfect digital counterpart to gold, could altcoins actually be the digital version of silver?
An unusual correlation between silver and altcoins has been discovered. Lining up the two price charts strikes an eerie resemblance to one another.
The major difference is that silver’s peaks and troughs are playing out across ten years, while altcoin price action represents just three years’ time. What’s interesting, is that the 24/7 always-on crypto market may be speeding up the cycle for altcoins, while silver trudges along slow and steady.
It’s also interesting to note that while gold exploded early on, recently hitting a 7-year-high, silver has recently broken out and surged to reclaim recent highs.
Bitcoin is now struggling with resistance and pulling back. Will profits flow from Bitcoin into altcoins and cause them to surge, just as gold profits have now made its way into silver?