Bitcoin’s Correlation with Gold Price Hits Yearly High
Bitcoin and Gold reached a monthly average correlation of 70%, which is an all-time high. The previous peak was 60%, which was reached earlier in the second quarter of 2020. It indicates that investors treat Bitcoin as an asset like gold, and it has a store of value for the long term, especially during economic turmoil. After the pandemic, both gold and Bitcoin rose sharply because of fiat money printing by governments.
In this uncertain time, both crypto markets, assets, and stock markets have been observing an outflow throughout this year. Still, Bitcoin and Gold perform well in this uncertain time because many investors and retailers treat them as an asset for long-term holding.
Though they may not provide a high return in the next two years, one should rely on these assets in the long term. Indeed, it is true that Gold is a more time-tested asset than Bitcoin, but the digital asset is a new concept that was popularized in 2020, so it has a great future in the next few years.
If you want a secure option, you can invest in Gold, but according to our Bitcoin price prediction, BTC is a good choice for the long term because it will provide more return than gold, or it can even beat the stock markets. However, most investors are worried about the sustainability of Bitcoin for the long term because it has been running on proof of work consensus, and it has a huge expense which is not good for our environment.
Most big investors support Bitcoin as an alternative decentralized version to traditional currency and assets worldwide, which is not regulated by the government or central banks. However, we can observe the influence of the central bank on cryptocurrencies these days, but it is not directly regulated. That is why you can consider it a risky asset, but it will provide a better return than traditional assets like gold and silver.