As the corona virus continues to spread throughout the world, entering now into Italy and Iran, as well as surging in South Korea, U.S. stock markets have plunged. Investor fears and selloffs have led to the worst day for stocks in the last two years.
The S&P has closed down 3%, and the DOW has dropped 1000 points. Among this sell off from investors, the price of gold has had its ups and downs as well. Though the price has increased some 6% in the last thirty days, it is currently resting a bit below zero. The chart itself looks quite nice, and no doubt investors have made nice gains since the start of this year.
But where does this stand for Bitcoin? Often touted by its defenders as a safe hedge against uncertain markets, has there been any statistical correlation between a falling stock market and rising, or at least stable, Bitcoin? Yes and no. It's price remains stable, so far as stability means anything for BTC, but we will need to watch in the coming weeks.
Though one company, Digital Assets Data has said the following:
“The findings tend to signal that Bitcoin is starting to behave more like a store of value and is potentially being used as a safe-haven asset during global uncertainty in traditional markets,”
Looking at these charts, its hard to say there is any kind of correlation. If anything, they all show the same volatility trends in the past few days. Aside from this, there does not seem to be any obvious correlation between BTC and Gold. But again, look at the last twenty four hours.
If stocks do continue to tumble in the coming weeks as this virus pandemic plays out, it will be interesting to see how BTC fairs. If it can at least maintain a level of stability, this will add to its appeal as a safe-haven of value, similar to gold.
If however BTC tumbles out like the stock market, it will give weight to the argument that BTC remains far from a store-of-value, and is instead still a speculative asset that should be avoided.
What do you think? Have you found evidence for correlation between BTC and Gold? Will it hold out its value against a possible fall in stock prices?
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