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Home Cryptocurrency news Bitcoin

Why Bitcoin Ditching Stock Market Correlation For Gold Is Bullish for BTC

Tony Spilotro by Tony Spilotro
9 months ago
in Bitcoin
Reading Time: 3min read
bitcoin gold stock market comparison apples oranges

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Bitcoin price this week exploded from its tightening consolidation range and within a day, broke through resistance at $10,000 and touched $11,400. The breakout followed gold setting a new record, rather than staying lock and step with stocks as the crypto asset has as of late.

Comparison charts show that the leading cryptocurrency by market cap may have ditched its correlation with the S&P 500 in favor of the soaring precious metal. If this is the case, this will benefit the entire crypto space – here’s why.

Bitcoin Swaps Correlation With S&P 500 For Gold

Gold set a new all-time high this week, just ahead of the United States government revealing details of their latest efforts to stimulate the economy.

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The dollar dumping, as a result, sent safe haven assets like precious metals soaring as more money supply poured into the already flooded market.

The latest round of stimulus adds another $1 trillion to the Fed’s balance sheet, prompting investors to flock toward assets that could act as a hedge against the expected inflation. Bitcoin has been recently called the “fastest horse in the race against inflation” by billionaire hedge fund manager Paul Tudor Jones.

Related Reading | Gold Rally Peaks: 5 Reasons Bitcoin Will Likely Outperform The Precious Metal

In this latest shakeup in the dollar, not only did gold benefit but so did Bitcoin. In fact, Bitcoin more closely followed gold’s reaction to the continued printing of money supply than it did to the stock market.

The leading cryptocurrency by market cap has been uncannily correlated to the S&P500 since Black Thursday. But as the dollar collapsed this week, the correlation appears to have ended.

bitcoin gold stock market correlation sp500 spx

BTCUSD / SPX / XAUUSD Correlation Comparison Chart | Source: TradingView

How The Crypto Market Will Benefit From Comparison With Precious Metals

The stock market correlation caused Bitcoin and the rest of the crypto market to crash mid-March, just as the assets had been breaking out of bear market resistance. The FUD related to the pandemic proved to be too much for any asset, for that matter.

Stocks, crypto, and even precious metals collapsed. All markets rebounded sharply, but none of them have performed as well as gold. And as of this past week, Bitcoin.

The crypto asset’s correlation with the stock market has held Bitcoin back for several weeks. It has also acted as an ominous dark cloud hanging over the industry, where a second-leg down scenario in stocks could have led to a lower low in crypto.

Related Reading | How The US-China Capital War a Billionaire Warns Of Could Benefit Bitcoin

Gold shining so brightly, and the cryptocurrency sharing so many similarities with the precious metal may have finally helped investors see through the storm and realize the asset’s potential.

No longer being at risk of getting dragged down by stocks in another massive drop scenario, is yet another way the greater crypto market will benefit from the return to anti-correlation with stocks.

silver altcoins xauusd ethusd xrpusd

XAGUSD / Altcoin Market Cap Correlation Comparison Chart | Source: TradingView

It’s not just BTC suddenly correlating more closely with gold, altcoins and silver are showing a shockingly similar chart pattern. Could altcoins be proving to be the silver counterpart to Bitcoin as digital gold?

The more these crypto assets join the safe haven conversation alongside precious metals, the narrative for the next bull market could be right under our noses.

Tags: bitcoinbtcbtcusdBTCUSDTcryptogoldPrecious Metalsxauxauusdxbtxbtusd
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Tony Spilotro

Tony Spilotro

I'm Tony Spilotro. Behind the pseudonym, I'm a global remote work leader with a decade of award-winning content experience and excellence. Here, I explore my newfound passions pertaining to privacy, finance, economics, politics, cryptography, property rights, and other libertarian-esque views. I am a Bitcoin evangelist, maximalist, and educator whenever I can be, helping to spread its message of freedom from government control, monetary policy mismanagement, and passing the buck - literally – to future generations. My journey from a curious retail crypto investor to a serious Bitcoin advocate, trader, and technical analyst is an unusual one, but life-changing nonetheless and has become less about money and more about a long-overdue revolution. While a firm believer in the laws governing math and science, I am profoundly fascinated by the impact of astrology and astronomy including moon and solar cycles and planetary alignment and their ability to influence and potentially predict markets. It hasn't yet clicked for me as to how to put anything to use, but I consider it my current rabbit hole I can't yet dig out of. My perspective of growing up alongside the internet, the dot com era, the Great Recession, and roots in video games collecting coins and rare items caused Bitcoin to immediately make sense to me. Through all of these lenses, I seek to produce content that is educational and entertaining, and I thank you sincerely for taking the time to read what I have to say. Please follow me on Twitter and feel free to drop me a line if you would like to work together.

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