Correlation between bitcoin and gold

Bitcoin and gold are two assets that have a lot in common, but also have many differences. Both are highly valuable, have limited supply, and are seen as a means of preserving value in an unstable economic climate. However, bitcoin also has outstanding advantages over gold, such as portability, security, transparency, and adaptability to technology.

During 2023, the correlation between bitcoin and gold increased significantly, reaching an all-time high. This shows that both asset classes tend to increase in price when faced with geopolitical, economic, and social risks. One of the factors influencing this correlation is the collapse of many banks in 2023, causing depositors to lose faith in the traditional financial system and seek safer options.

In 2023, the FED raised interest rates to the highest level since 2008, to curb inflation and stimulate economic growth. However, high interest rates can also reduce demand for risky assets, like stocks, and increase demand for safe assets, like bonds and gold. Bitcoin, although considered a risky asset, is not affected by interest rates, and even increases in price when interest rates increase. This is likely because bitcoin benefits from an increase in money supply and liquidity.

Bitcoin also has unique characteristics, making it not dependent on interest rates, but can also take advantage of opportunities from technological development. These are the reasons why bitcoin can surpass gold in value and potential.