Bitcoin Correlates With Gold, Silver Drops To Cyclic Low: Glassnode

Data from Glassnode shows that bitcoin’s correlation with gold and silver has recently moved towards cyclical lows.

Bitcoin’s correlation with gold and silver has now turned negative

According to data from on-chain analytics firm glassnodeThe latest price action in BTC has separated the cryptocurrency from commodities like gold and silver.

“Correlation” here is an indicator that tells us how closely bitcoin is moving with a particular asset over a given time period. In the context of the current discussion, the 30-day time period is interesting.

When the correlation value is positive, it means that the cryptocurrency is currently mimicking the movement of other assets. On the other hand, negative values ​​of the indicator suggest that BTC is moving in the opposite direction of the commodity price.

Naturally, the higher the value of the metric (whether on a positive or negative scale), the stronger is bitcoin’s response to volatility in the associated asset.

The correlation can also attain a value of zero during periods where there is no clear pattern between the prices of two assets (such as when one of the assets moves sideways while the other is experiencing some kind of volatility). .

Now, here is a chart showing the trend of the 30-day correlation of bitcoin with gold and silver over the past few years:

Looks like the value of the metric has plunged in recent days | Source: Glassnode on Twitter

As shown in the graph above, Bitcoin’s 30-day correlation with both gold and silver was recently high, but with the cryptocurrency’s latest surge, the indicator’s value has been deeply impacted.

Following this decline, the value of the metric has fallen into negative territory for both these assets, with BTC’s correlation with XAU (the price of one troy ounce of gold) reaching -0.78, while XAG (one troy ounce of silver) The relationship with has deepened even more. Up to -0.90.

In the case of gold, the correlation between the two assets is now close to a cyclical low, while for silver, the indicator has already set a new cyclical low with this decline.

Bitcoin is currently showing such a negative correlation with these commodities because their prices have been trending lower recently, while the cryptocurrency has seen a very sharp rally at the same time.

The current value of the 30-day correlation represents an interesting change in price trend, as bitcoin has moved strongly in tandem with these traditional assets since the rally began in January this year, except for the period between late February and early March. Used to be.

It remains to be seen whether bitcoin will remain aloof from these assets and play its part in the coming days, or if the break in correlation is only temporary, as in the examples mentioned earlier in the year.

btc price

At the time of writing, bitcoin is trading around $30,200, up 5% over the past week.

BTC hasn't moved much during the last few days | Source: BTCUSD on TradingView

Featured Image from iStock.com, Chart from Tradingview.com, Glassnode.com