and gold both hit three-week highs on Thursday after a period of highly correlated . It comes as the dollar crashes and warning signs flash on the stock market.
The correlation strengthens ’s case as “digital gold” and proves that traders are beginning to treat like a traditional asset. As the dollar crumbles and whispers of recession grow, could spike alongside gold as a hedge against a future bear market in stocks.
bitcoin and Gold Strong Correlation
As you can see in the chart below, both and gold spent the week in an upward trend. is up 4.8% on the week with gold up 1.4%.
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and gold both followed an uptrend this week as the dollar tumbled. marked in orange, gold marked in blue. Source: View.
is at a three-week high, . A break above this line would indicate a strong bullish case for the world’s largest . Meanwhile, gold also hit a three-week high, touching $1,318 on Thursday.
Both assets are also closely correlated with the VIX index this week, a measure of volatility in US stocks.
The coincidence is too big to ignore. Traders are treating as a hedge against traditional markets.
bitcoin and Gold: the Trade of the Century?
Not only are their price movements similar this week, but analysts are talking about and gold in the same way: positively.
As tests $4,100, analysts are fairly confident the bottom is in the market and a bull run is around the corner.
I’d be extremely surprised if the bottom wasn’t in for this bear market.
If you’ve been on the sidelines, what are you waiting for if not now?
If you’re a long-term bull, the 5 year EV is 25-50x, and you’re going to wait to time an entry that’s 20% more attractive?
— Ryan Selkis (@twobitidiot)
At the same time, experts are talking up gold. Yesterday, that one of the best-performing hedge funds is loading up on gold. Crescat Capital said buying gold and selling stocks is the “trade of the century.”
On , Suki Cooper, executive director of precious metals research at Standard Chartered, said gold may be heading to five-year highs by the end of 2019.
“Fourth quarter that we’ll see gold prices testing the highs that we saw in 2018 and 2017 and potentially matching the highs from five years ago.”
It appears that analysts expect a huge breakout for both gold and this year.
Stocks Set for Collapse?
At the same time, stocks are on thin ice. Crescat Capital is rapidly selling stocks amid fears that a recession could come .
“We think [a recession is] a lot closer than [2020] and we have a number of macro timing indicators that we look at.”
Short the Dow for 2019’s Coming Recession, Says Top Hedge Fund
— CCN.com (@CCNMarkets)
Similarly, the dollar is in a weak position after the Fed . One market analyst :
“The Fed was even more dovish than expected and that added to concerns that U.S. growth, and therefore global growth, is hitting a patch of weakness.”
With the dollar poised to fall further and stocks on the verge of collapse, money could pour into gold and .
bitcoin as “Digital Gold”
is often compared to gold because of its finite supply. and gold are both referred to as a of value and positioned as “safe havens” for when traditional markets are rattled.
We saw a similar correlation between the two in December when the stock market tumbled over Christmas. The that and gold traded with a 0.84 correlation. According to the WSJ, is behaving more like a traditional asset because of new institutional traders.
If this early correlation is accurate, we could see huge upside movements for by the end of 2019.
Published at Thu, 21 Mar 2019 13:17:41 +0000
