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One Thing About Bitcoin "Really Surprised" Bloomberg's Senior Editor

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Mon, 08/17/2020 - 14:28
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Alex Dovbnya
Bloomberg's executive editor Joe Weisenthal reveals the most surprising thing about Bitcoin
One Thing About Bitcoin "Really Surprised" Bloomberg's Senior Editor
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In his today’s newsletter, Joe Weisenthal, executive editor at Bloomberg Digital, writes that Bitcoin’s growing correlation with gold is something that surprises him most of all about the world's largest cryptocurrency.

While looking at Bitcoin, one thing really surprised me, which is how similar its action looked to gold.

The 20-day chart posted by Weisenthal shows that Bitcoin’s intraday action looks eerily similar to that of the lustrous metal.

Bloomberg
Image by @TheStalwart

When Bitcoin was touched by Midas

The military conflict between the U.S. and Iran, which kicked off this crazy year, marked Bitcoin’s first major test as a risk-off asset based on how it was reacting to the timeline of the events.

Messari
Image by @MessariCrypto

The ambidextrous cryptocurrency showed its risk-on side during the violent sell-off in mid-March, taking a beating together with the equities market during a liquidity crunch.

On March 13, BTC tanked by 51 percent, which ended up being the third-worst day in the coin’s history. While gold also saw a sharp drop, it managed to stage a swift V-shaped recovery while its correlation with Bitcoin dropped to almost -50 percent.

In late July, when gold started its march to a new all-time high $2,074, the metal's correlation with Bitcoin grew from -0.1 percent to a new record of 67.1 percent within a few weeks, according to data provided by Skew.

correlation
Image by @skewdotcom

After enduring a painful correction on Aug. 11, both Bitcoin and gold are once again on a tear today. The former recently printed a new 2020 high of $12,200.

Related
Bitcoin Getting More Decentralized, Data Shows

A macro-sensitive asset

Despite being a notorious Bitcoin skeptic, Weisenthal admits that Bitcoin's record high correlation with gold means that the crypto king has started playing a sizable role in institutional portfolios.

Further, this implies that BTC is a "macro-sensitive" financial asset driven by the same headwinds, with plunging interest rates being the most notable one.

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About the author

Alex Dovbnya (aka AlexMorris) is a cryptocurrency expert, trader and journalist with extensive experience of covering everything related to the burgeoning industry — from price analysis to Blockchain disruption. Alex authored more than 1,000 stories for U.Today, CryptoComes and other fintech media outlets. He’s particularly interested in regulatory trends around the globe that are shaping the future of digital assets, can be contacted at alex.dovbnya@u.today.