Bitcoin’s Correlation with Both S&P 500 and Gold Jumps to an All-Time High

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Since hitting a year low in mid-March at $3,850, the price of Bitcoin has jumped about 90% as it currently trades above $7,050.

Just like price, the hash rate of the network has also been recovering, growing by 7.3%. This growth means inefficient miners have started to capitulate and are being replaced by more efficient miners, “which is positive for the long-term health of the network.”

Other Bitcoin fundamentals are also showing healthy recovery with BTC active addresses increasing by 63%. The price increase also means 56% of Bitcoin addresses are in profit.

Meanwhile, the amount of Bitcoin held on exchanges has decreased by about 3%. This decline has been largely due to the rapid decrease in the supply held by BitMEX.

The amount of BTC held in BitMEX has been in freefall over the past few weeks, going from 315k BTC on March 13 to 244k to March 29, after the crypto exchange went through mass liquidations on March 13 during the violent sell-off.

Correlation with S&P 500 Jumps to New High But so does with Gold

Over the past few days, Bitcoin price has been surging but so has been the stock market. The world’s leading digital asset has been following the equities market since mid-February when coronavirus concerned investors sold whatever they could in the face of a liquidity crunch.

The fact that bitcoin is still following the stock market, some argue that it continues to act as a risk-on asset. The Bitcoin’s Pearson correlation with S&P 500 has actually reached a new high but at the same time Spearman correlation is still seeing the level that has been recorded several times, as per Coin Metrics.

But interestingly, Bitcoin’s correlation with gold has also jumped to an all-time new high which means its safe haven asset narrative is not only intact but could be stronger than ever.

In mid-March, when the digital asset got sold off aggressively alongside equity markets, the precious metal took a hit as well which has been because of the forced liquidations that happened in about every financial market.

Since falling hard in mid-March, both Bitcoin and bullion, however, have recovered some of their losses.

This could have been because of the government printing money and lowering the interest rates to zero.

“Unprecedented monetary policy and fiscal stimulus from nearly every country in the world is forming the base for a credible narrative of increased risk of severe financial imbalances and the potential for long-term increases in inflation,” noted Coin Metrics.

It’s the next alternative hard money

In the current time of crisis, experts have been calling out for investing in gold and bitcoin. This is actually why bitcoin has been created, so it’s BTC’s time.

Bitcoin proponent and the host of the Keiser Report, Max Keiser, also shared that hard money is the way to go during the volatile market conditions.

“The next alternative hard money, aside from silver, is bitcoin, and that’s why you see interest in bitcoin right now, it’s up this year. It’s one of the few markets in the world that’s up in 2020,” Keiser said.

Keiser also said that the myth that bitcoin can’t be a store of value because of its high volatility is busted in 2020. This year, we have seen that Bitcoin is the “least volatile asset class,” stocks, oil, and many currencies had rather higher volatility than the digital asset.

“Bitcoin is coming into its own in 2020 and it is a store of value, it is gold 2.0, and it will achieve a market capitalization like gold in the many trillions of dollars,” he said.

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