【LongHash Column】Despite the debates, there still exists no correlation between the prices of Bitcoin and gold.

It is well known that Bitcoin is often referred to as "digital gold," and some also consider investors to view this cryptocurrency as a hedge asset in times of global instability. Recently, the conflict between the United States and Iran seems to have proven this point. As tensions between the two countries escalated in the early days of 2020, the price of Bitcoin also began to rise during the same period.

However, long-term data tells a different story. Just like we found out this time last year, there is actually no correlation between the prices of Bitcoin and gold. Bitcoin Price Correlation Data The data in the chart below shows the correlation between Bitcoin, gold, ETH, and the S&P 500. Coin Metrics calculated the data in the chart by computing the 90-day Spearman rank correlation coefficient. In the Spearman rank correlation coefficient, the range of correlation values is from -1 to 1. A value of -1 indicates complete negative correlation, a value of 0 indicates no correlation, and a value of 1 indicates complete positive correlation. As shown in the chart, since the end of 2013, the price correlation between Bitcoin and gold has remained between 0 and 0.2. This indicates a very weak price correlation between these two assets. On the other hand, ETH is highly correlated with Bitcoin, especially since early 2018. Bitcoin seems to have become a hedge asset in times of global turmoil. We have pointed out that during the Greek debt crisis in June 2015, the Brexit referendum in June 2016, and the Donald Trump election in November 2016, Bitcoin performed strongly. However, throughout the traceable history, the level of correlation between Bitcoin and gold has remained relatively unchanged. Despite claims that Bitcoin has become a hedge asset in times of turmoil, in October 2019, there was still a slight negative correlation between this cryptocurrency and gold. Although the numbers may look better when calculated by another correlation measure, they are still not enough to explain a high correlation between these two assets. Furthermore, reports of an increasing correlation between Bitcoin and gold have proven to be short-lived. While the price of Bitcoin did rise alongside gold after the killing of Qasem Soleimani, a senior commander of the Islamic Revolutionary Guard Corps, the long-term trend of Bitcoin's correlation with gold prices remains weak. One event cannot prove a trend, especially considering the multiple instances where Bitcoin and gold prices have diverged. In conclusion, the analogy of digital gold still applies to Bitcoin, as it is a non-political, uncontrolled digital asset; however, Bitcoin still has a long way to go to achieve the status of a hedge asset equivalent to gold. Looking ahead, we should closely monitor the price correlation between Bitcoin and gold, as a higher correlation between the two may indicate that Bitcoin is one step closer to becoming an accepted alternative means of storing value. This article is from our partner LONGHASH. Further Reading - Did the price of Bitcoin in Iran really surge? The reality may be quite the opposite - Iran launches missiles, Bitcoin breaks 2020 high Join now to get the most comprehensive information on financial technology, blockchain news, and industry examples! Join here: [https://lin.ee/pl4ELGl](https://lin.ee/pl4ELGl)