Bitcoin And Gold Correlation Could Create Profitable Trading Opportunities
Benjamin Roussey
Benjamin Roussey is from Sacramento, CA. His bachelor’s degree is from CSUS (1999) where he was on a baseball pitching scholarship and he completed 4 years in the US Navy. He has an MBA in Global Management from the Univ. of Phoenix (2006). He has worked everywhere from small businesses to large corporations, and also for public agencies. He has lived in South Korea and Saudi Arabia where he was an ESL instructor. Benjamin has a tremendous work ethic and is quite focused. Now he writes professionally for several clients that cover one sector of our economy to another. Currently he lives in the Phoenix area. He enjoys sports, movies, reading, and current events when he is not working online.
Researchers and financial experts increasingly seem to believe that bitcoin and gold prices may have an intriguing inverse relationship. In the past one year, cryptocurrencies have increased in value, while the gold markets were depressed. Similarly, when gold prices shot up, the digital currencies depreciated in value.
Strategic Investment Shift
Analysts have observed this inverse relationship better over the previous two weeks when the bitcoin market saw its largest value declines since the beginning of 2017. For example, Daniel Marburger, Director at Coininvest (a precious metals company) recently stated in an interview that he had sold 30 kilograms of gold and reinvested that money into bitcoin.
Marburger explained that they have been flooded with emails and phone calls from customers enquiring how they could convert their cryptocurrency holdings into gold.
It is an extraordinary situation, which highlights a strategic shift from bitcoin and other virtual currencies to a stable, solid investment in these unpredictable times for the crypto market.
Near-term Rise of Bitcoin Predicted
Research analyst Scot Macdonald from Seeking Alpha has said that the inverse relationship between bitcoin and gold has been in existence for some time, and this relationship has become stronger after the creation of bitcoin futures markets. Macdonald’s “Elliot Wave” research points to the fact that bitcoin prices have hit the bottom, and may be set to rise in the forthcoming days and weeks.
Meantime, after gold markets rose in value last week, Macdonald’s analysis indicates that the metal’s value is set to enter a bearish market phase. Macdonald recommends that traders should buy bitcoin and sell gold in the weeks ahead.
Bitcoin futures markets had seen a meteoric rise and the valuation of bitcoin had hit $19k when gold was trading at $1,265. And ever since bitcoin valuations started receding from the $19k zone, the value of gold began to increase.
Macdonald says that an identical market reaction had occurred in March and September last year. He believes that the inverse relationship between these two variables can help to predict each asset’s movement in the short-term future.
This market behavior between these price markets indicates that gold and bitcoin are closely inversely related to each other. Traders looking for profitable short-term investing opportunities are closely observing this relationship, which might give them clues about whether to purchase bitcoin and dispense with gold at this time.
Gold Seen as a Safer Alternative
Mark O’Bryne, founder of Goldcore (another precious metals firm), has stated that his organization too has observed this apparent inverse correlation between these two markets. O’Bryne highlights that conventional investors are reducing the risk of highly volatile cryptocurrencies to a more traditional investment asset like gold, which is typically more solid.
O’Bryne explains to the press that bitcoin traders had conveyed concerns to them that the unprecedented price escalation in bitcoin was not sustainable and that they felt skittish about it. He further highlighted that people are realizing that the digital currencies signify a much higher level of risk than conventionally safe assets.
Ross Norman, who also deals in gold in London, informs that customers of various ages are coming to them to trade bitcoin for gold. He says that they are witnessing sales upwards of a million pounds every two weeks.
Many bitcoin advocates, bullion dealers, and financial researchers are now convinced of a unique interrelationship between bitcoin and gold, which have both been considered “safe havens” over the past year.
The volatile global economy has attracted investors to both physical and digital gold. Financial researcher Andy Hoffman states that both these kinds of investments are actually allies against the “most destructive and largest Ponzi scheme of fiat currency.” Well, nothing is as big as the Barney Frank real estate fiasco of 2008 but that is another story.
Hoffman states that these two investment tools, bitcoin and gold, are not adversaries but allies in the disintegration of the fiat regime. Kind of like Autobots and humans, they are both fighting the Decepticons in those amazing Transformers movie but let’s not digress anymore.
More Research Needed
While market observers increasingly agree to the existence of a correlation between bitcoin and gold, certain members of the digital currency trading community tend to disagree. Some members of this community have accumulated data to highlight that this relationship might only be speculative.
Drawing meaningful and conclusive insights into the relationship between gold and bitcoin will need more in-depth research. More data from the markets gathered in the weeks ahead could indicate a definitive relationship between bitcoin and gold.
