The relationship between and has strengthened over the past few weeks, confirming bitcoin proponents’ claims that the crypto token is also a safe haven. At the same time, its correlation with US stocks has declined significantly amid the banking crisis, especially over the past week.
Split between bitcoin and stocks
The correlation between bitcoin and gold has been on an upward trajectory in recent weeks, moving away from stock prices as the current banking turmoil affects the stock market. The relationship between bitcoin and equities has begun to weaken due to the collapse of the SVB, which triggered the current banking crisis, as the correlation between cryptocurrency and gold was rising earlier.
The change in the ratio confirms the claims of bitcoin proponents who tout the virtues of cryptocurrencies as a safe haven along with metals. These arguments have become unconvincing in recent years as the correlation between bitcoin and stocks has reached new heights.
The stock market, which has been struggling for a year due to record inflation and aggressive interest rate hikes, came under increased pressure last week after US regulators shut down SVB in what was the second-biggest bank failure since 2008. Bank stocks were particularly hard hit, falling to multi-year lows as investors jumped ship.
Banking Crisis and Rising Benchmarks in Europe Drive Bitcoin Further Rise
However, recent events have fueled further gains for bitcoin, which broke the $26,000 threshold twice this week. Thanks to this rebound, the cryptocurrency’s tendency to move with US stocks has decreased and its association with the yellow metal has strengthened.
The cryptocurrency rally received additional momentum after new data from (CPI) in Europe, which showed that the index in the Eurozone rose from 5.3% in January to 5.6% in February. The world’s leading cryptocurrency is up over 6.5% in the last 24 hours.
Meanwhile, the price of gold also rose. rose 1.2% to $1945 an ounce as investors turned to safe rates amid unexpected banking instability. While the near-term outlook for gold looks bullish, bullion could come under pressure if the Fed decides to hike rates sharply next week. However, most observers believe that the central bank will choose another option.
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Disclaimer: Neither the author, Rukholamin Hakshanas, nor this website, The Tokenist, provide financial advice. Please read our website policies before making any financial decisions.
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