Bank of America analysts Alkesh Shah and Andrew Moss noted “that investors may see bitcoin as a relative safe haven as macroeconomic uncertainty continues.“
Bank of America market strategists say the growing correlation between bitcoin and gold indicates that investors may view bitcoin as a relative safe haven.
Alkesh Shah and Andrew Moss, market strategists in Bank of America’s securities division, detailed this week that bitcoin and gold have been highly correlated lately. This news follows recent report by crypto data provider Kaiko, which indicated that bitcoin has been less volatile than the Nasdaq and S&P 500 indices. other global assets, got investors thinking about the future of the global economy.
—Bloomberg Crypto (@crypto) October 24, 2022
“A decelerating positive correlation with the SPX/QQQ and a rapidly rising correlation with the XAU indicate that investors can view the bitcoin as a relative safe haven as macro uncertainty continues and a market bottom remains to be seen“, wrote the Bank of America analysts.
On Monday, October 24, both bitcoin and gold prices remained in a tight range and were less volatile than stock markets. Bitcoin is trading at just over $19K, while an ounce of gold trades for a nominal US$1,646.70. Bank of America’s Shah and Moss have been watching the 40-day correlation with gold, which is around 0.50 this week. The 0.50 rating is much closer and shows a stronger correlation with the precious metal than the zero rating of the main crypto asset.
The move comes at a time of heightened macroeconomic uncertainty, and analysts have warned that rate hikes by the US Federal Reserve could trigger a liquidity crunch for US Treasuries. Market watchers expect an aggressive rate hike next month, but strategists also believe the Fed will pivot by December. Gold and BTC have fallen significantly since the all-time highs in the prices of these two assets. Gold, for example, hit an all-time high against the US dollar on March 8, 2022, when it hit $2,074 per ounce.
Gold has lost 20.49% against the US dollar since hitting an all-time high 230 days ago. The crypto asset bitcoin (BTC) has lost 72% against the greenback over the past year, after touching $69,044 per unit on November 10, 2021. Gold today has an overall market capitalization of around 1.5 billion euros. $10.895 trillion, while BTC, the market capitalization of BTC is around $369 billion.
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Bitcoin’s growing correlation to gold indicates investors see it as a safe haven, Bank of America strategists say
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