Bitcoin and gold and oil – crypto among traditional assets

Is Bitcoin (BTC) a safe haven? It is called “new gold” or “digital gold”, but still many investors have doubts about it. Quite right…

Bitcoin and the price of gold

Recently, as tensions between the United States and Iran have increased, gold has reached its highest level in 6 years, while the price of BTC has increased by about 20%. Hence, the topic of how cryptocurrencies and gold prices are correlated has returned to the wallpaper.

Looking at what has been happening on the Bitcoin and gold market from April 2013 to the present day, one can see that bullion reached its peak on the chart in 2020, while the cryptocurrency at the end of 2017. So is there any connection?

When calculating the correlation between the prices of gold and BTC in the period from April 2013 to December 2019, the data showed that they are significantly correlated at 46.5%. Interestingly, when comparing the price correlation between 2018 and 2019, we can confirm that the price correlation increases from 60.3% in 2018 to 70.8% in 2019. Is this the effect of the maturing of the crypto market?

Dreams of naive crypto-investors?

Over the last week, the price of gold rose to a record high of USD 1,606 per ounce. At the same time, Bitcoin rose to USD 8,300, the highest price since November 2019.

Looking solely at price correlations, investors may be tempted to conclude that there is a link between gold and Bitcoin. However, the data are not sufficient to reach such conclusions. It is simply that BTC’s price was too close to that of gold to conclude from now on.

Oil and BTC

Now let’s look at the “Bitcoin and oil” thing. Recently – also as a result of the US-Iran conflict – the price of WTI oil rose by 2.86% between 2 and 7 January. The price of Brent oil rose by 3.9%. The prices of oil futures also behaved similarly.

Thus, we have a similar correlation with BTC as in the case of gold. However, the correlation between 2018 and 2019 is even negative – 22% in 2018 and already -3.7% in 2019.

Bitcoin: what is it?

The classification of Bitcoin remains an open question. On the one hand, BTC behaves like a safe haven. It started to grow during the Cyprus crisis in 2013 and now, when we were (threatened?) by war between Iran and the US. But is this enough to consider BTC a safe haven?

In the long term, taking into account previous years, BTC still offers a better option for investors compared to investing in gold or oil. This may be due to the speculative nature of the cryptocurrency, not the fact that it is already a safe haven asset for a period of upheaval.

On the other hand, “crypto free from state interference and geopolitical risk are becoming digital gold in the face of growing tensions in Iran,” as experts from the Nikkei Asian Review note.

So can we talk about safe haven here? Not yet, but there is a chance that 2020 will answer some questions…

Barry Smith

Hi! My name is Barry Smith and I've been interested in the cryptocurrencies and blockchain industry for 4 years. I create to share my knowledge with other users and give them the opportunity to make money by investing in bitcoin. Thank you for reading my articles, but remember that these are only my own observations, not investment advice.

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