Over the past two months, the correlation between bitcoin and gold has changed from negative (-0.45) to consistently positive (+0.81). This is evidenced by data from The Block.
The previous months were characterized by a very high correlation (which in some places reached 0.96) of bitcoin with the Nasdaq Composite and S&P 500 stock indices. However, the main feature of recent months has been the rapid convergence of the dynamics of the BTC rate and the price of gold on exchanges.
Bitcoin is perceived by market participants in different ways. On the one hand, the demand for it follows the trends of high-risk assets like shares of US technology companies. On the other hand, bitcoin acts as a protective asset like gold. That is, investors have incentives to invest in BTC for the purpose of long-term inflation protection.
To analyze the correlation between indices and assets, The Block analysts use the Pearson correlation coefficient over a period of 30 days. This coefficient evaluates the linear relationship between two variables. Its sign shows a direct or inverse relationship between them, and the modulus of the coefficient (from 0 to 1) indicates the tightness of their dynamics.
A period of 30 days allows you to minimize the influence of random factors and fluctuations. In this way, analysts can obtain objective data regarding the relationship between the studied prices. As of September 26, Bitcoin had a strong correlation with both gold and stock indices, with Nasdaq Composite: +0.89 and S&P 500: +0.87.
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