Is Bitcoin a Digital Gold? Kaiko Data Indicate Otherwise

  • Bitcoin correlation with Gold reaches a new 3-year low, moving into negative territory.
  • Bitcoin correlation with S&P 500 and Nasdaq is positive.

Bitcoin has often been projected as the digital equivalent of gold as it acts as a store of value and inflation hedge quite similar to the functions associated with gold. However, if you ask any Bitcoin proponent about the parallels, most would say Bitcoin would rather displace gold and act as an independent asset class rather than digital gold. The recent data from Kaiko paints a similar picture as Bitcoin’s correlation with gold has reached a new 3-year low moving into negative territory.

A negative correlation suggests the two asset classes would not follow the price pattern for each other while a positive correlation indicates the asset class would follow each other’s price movement. The negative correlation suggests Bitcoin and Gold are least co-related as an asset class.

Bitcoin Has a Positive Correlation with S&P 500 Index

Bitcoin continues to move away from Gold but has a positive correlation with the popular stock index S&P 500 and Nasdaq. Before the bull run began towards the end of November last year, BTC had a close correlation with the stock market but the correlation almost vanished as the cryptocurrency started to climb during the bull run reaching a new ATH of $64,863 recorded in April this year.

Bitcoin price took a massive hit last month starting in the second week of May, which saw its price fall to a new 3-month low just above $30k. The price of BTC and several other altcoins saw a slump of over 50%, a day that saw nearly $500 billion wiped out of the crypto market. The positive correlation between the stock market could be attributed to the recent slump in the market and the correlation would decline once Bitcoin is back to its early price highs.


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