- The inverse relationship meant that when the price of BTC rose, the precious metals market would fall and vice versa.
- BTC has also shown greater decoupling from tech stocks.
The world’s largest crypto asset by market cap, Bitcoin [BTC], has shown increasing decoupling from the main asset classes of the TradFi realm in recent months. According to a tweet from on-chain analytics firm Glasnode of June 27, the 30-day correlation with precious metals such as gold [XAU] and silver [XAG] tumbled to -0.78 and -0.9 respectively.
Source: Glassnode
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The inverse relationship meant that when the price of BTC rose, the precious metals market would fall and vice versa.
BTC Grows as the Precious Metals Market Collapses
When analyzing the recent price trajectories of the three assets in question, it was clear that the digital assets and the real world assets moved on different wavelengths.
While “digital gold” Bitcoin, high on institutional interest in cryptos, has pumped 22% over the past two weeks, its real-world counterpart saw a 2.3% drop over the same period. Silver, on the other hand, experienced a larger fall of more than 5%.
A fascinating aspect of the price trend was how BTC rose in value alongside gold and silver after the US banking crisis in March, showing a strong correlation. However, the latest turn of events showed a remarkable divergence.
Source: Glassnode
Bitcoin as an independent asset class
To put things in perspective, this meant that the market could choose BTC over precious metals as a hedge against inflation. This could reinforce the long-supported safe haven narrative.
And while detractors could argue that given historical trends, BTC would become more like stocks as a result of the decoupling from gold, the reality was very different.
According to a recent report According to crypto market data provider Kaiko, BTC’s correlation to the Nasdaq 100 index plummeted to its lowest level in three years in June, implying a significant detachment from traditional high-risk assets.
Source: Kaiko
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It was clearly evident that BTC was viewed as an independent asset class with its own fundamentals rather than being affected by real world headwinds.
However, the challenge would be to maintain this status in the long run given the growing adoption of cryptocurrencies in general and BTC in particular.