Despite the ongoing cryptocurrency bear market, investors have been increasingly looking at Bitcoin
The rise in the correlation between Bitcoin and gold (XAU) is one of the major indicators demonstrating investors’ confidence in BTC amid the ongoing economic downturn, according to digital strategists at the Bank of America.
Bitcoin’s correlation with gold — which is commonly viewed as an inflation hedge — has been on the rise this year, hitting its highest yearly levels in early October. The growing correlation trend started on Sept. 5 after remaining close to zero from June 2021 and turning negative in March 2022, BofA strategists Alkesh Shah and Andrew Moss said in the report.
“Bitcoin is a fixed-supply asset that may eventually become an inflation hedge,” the strategists wrote. The growth in BTC/XAU correlation is not the only indicator signaling growing investors’ confidence in Bitcoin as a store of value though.
Bitcoin has also been increasingly correlated with major stocks like the S&P 500 (SPX) and Nasdaq 100 (QQQ). The correlation between Bitcoin and both SPX and QQQ reached all-time highs on Sept. 13, the BofA strategists wrote, adding:
“A decelerating positive correlation with SPX/QQQ and a rapidly rising correlation with XAU indicate that investors may view Bitcoin as a relative safe haven as macro uncertainty continues and a market bottom remains to be seen.”