Gold vs BTC correlation indicators Bitcoin changing into protected haven: BofA
A brand new examine exhibits that regardless of the present cryptocurrency bear market, buyers wish to bitcoin (BTC) as a protected haven.
In accordance with Financial institution of America digital strategists, the growing correlation between bitcoin and gold (XAU) is without doubt one of the key indicators reflecting investor confidence in BTC amid the continuing financial slowdown.
Bitcoin’s correlation with gold – generally seen as an inflation hedge – has been rising this 12 months, reaching its highest annual excessive in early October. BofA strategists Alkesh Shah and Andrew Moss mentioned within the report that the development of accelerating correlation started on September 5, after being near zero since June 2021 and turning damaging in March 2022.
“Bitcoin is a hard and fast provide asset that might ultimately turn out to be an inflation hedge,” the strategist wrote. Nevertheless, a rise within the BTC/XAU correlation just isn’t the one indicator indicating growing investor confidence in bitcoin as a retailer of worth.
Bitcoin has additionally had a bullish correlation with main shares such because the S&P 500 (SPX) and Nasdaq 100 (QQQ). BofA strategists wrote, the correlation between bitcoin and each SPX and QQQ reached an all-time excessive on September thirteenth:
“A optimistic correlation with SPX/QQQ and a bullish correlation with XAU point out that buyers might view bitcoin as a relative protected haven as macro uncertainty continues and a market backside stays to be seen.”
BofA strategists additionally famous the large outflow of bitcoin from exchanges to particular person or self-hosted wallets. In accordance with the examine, weekly BTC change outflows in early October had been the biggest since mid-June, marking the third consecutive week of outflows. The strategist emphasised that giant and sustained outflows into private wallets point out restricted near-term promoting strain, stating:
“Buyers switch tokens from change wallets to their private wallets after they intend to HODL, indicating a possible discount in promoting strain.”
The BofA strategist famous that the report’s methodology consists of information from main bitcoin exchanges, together with Binance, Coinbase, Coincheck, FTX, Gemini, Kraken, and others.
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“The transparency of the blockchain provides us perception into the digital asset ecosystem that isn’t accessible in conventional monetary markets,” the analyst mentioned.
The brand new report comes amid rising dangers of a worldwide financial slowdown, fueling larger demand for inflation hedges. Bitcoin has misplaced almost 70% of its market cap amid the heavy crypto winter of 2022, elevating extra doubts about its standing as an inflation hedge.
