Bitcoin and Gold Growing Correlation, Is It a Bullish Sign?
This week, Bitcoin (BTC) rallied to its 2020 high of $11,392. At the same time, its correlation with gold has increased. At the moment, BTC’s monthly relationship with gold on daily returns sits at 0.66.
The correlation began to surge as gold broke through $1,900, closing a new high before pulling bank alongside Bitcoin. The growing correlation represents a trend shift as the connection between the two has previously been falling. This was based on the data from Kraken exchange’s research team.
As the correlation between gold and Bitcoin is improving, Ether’s (ETH) relationship with Bitcoin began to diminish around the same time, and the figure was recently at 0.56.
James Li, CryptoCompare’s research analyst, stated, “With innovations and hype around DeFi, we started to see prices decouple within the crypto space. Ethereum is an enabler and we saw a much stronger gain over the last few weeks, alongside gains from other DeFi tokens.”
A Bullish Or Bearish Sign?
Bitcoin is, most of the time, referred to as digital gold. Its correlation with the precious metal might further cement its position as a store value asset when the U.S. Federal Reserve gets ready to pass yet another coronavirus stimulus bill.
Furthermore, Li mentioned that, as the last correlations between Bitcoin and gold led to increases in the BTC price, the context has undoubtedly evolved.
Li noted, “Last time Bitcoin has a moderate correlation with gold – around 0.5 – was towards the end of 2018. That was when a month earlier in November 2018 Bitcoin suffered a 50% drop – at the height of the Bitcoin cash war – and some subsequent rebounds.”
During that time, gold was rebounding from a cyclical drop a few months earlier. Then, the correlation in that time was somewhat of a coincidence.
While the dollar and the economy further get difficulties with the fallout of the COVID-19 pandemic, it looks like the store of value assets, such as Bitcoin and gold, would continue to be in high demand.
XRP Up 30%
Meanwhile, the number of accounts holding over one million XRP has boosted by 3.7%. According to Santiment’s holder distribution chart, this may be 30 new whales surfaced during the past two weeks.
In addition to that, these investors are now holding within the range of $240,000 and $2.4 million in XRP each. And this has contributed to an upward pressure on the price. Following a relatively uninspiring several months, XRP has shown a price increase of more than 30% from $0.19 to $0.25 in a fortnight. About 30 investors with deep pockets think that the price rise is set to continue.
There is no apparent reason for the recent boost in whales except for speculation. The token has reclaimed the number three spot from Tether. However, the firm is currently in court facing a class action from investors.
Recently, they recognized Ripple in a bill proposal from the Bureau of Consumer Financial Protection in the U.S. about cross border payments. And earlier this week, Craig DeWitt, Ripple’s Director of Product, revealed a P2P payment platform built on XRP.
