“Bitcoin is the digital gold” is among the hottest narratives within the cryptocurrency trade, reiterating BTC’s rising standing as a formidable retailer of worth. Nonetheless, whereas the premier cryptocurrency has floundered over the previous months, gold and the metals market have largely witnessed explosive progress.
These contrasting performances have led to conversations about capital rotation between Bitcoin and gold, as the gang expects one to at all times outperform the opposite at any given time. Current knowledge, nonetheless, means that the connection between the BTC and gold worth motion is overrated.
Capital Move Hyperlink Between BTC And Gold Overestimated
In a January 24 submit on the X platform, on-chain analyst with the pseudonym Darkfost weighed in on the discourse surrounding capital rotation between gold and Bitcoin. In accordance with the market pundit, the concept that investor funds stream from gold to Bitcoin is considerably overblown.
To focus on this overestimation, Darkfost shared a chart displaying durations the place BTC outperforms or underperforms relying on gold’s development. This chart sometimes gives two indicators: constructive (BTC above the 180-day shifting common [MA] and gold under the 180-day MA) and damaging (BTC under the 180-day shifting common and gold under the 180-day MA).
As noticed within the chart above and said by Darkfost, the connection between Bitcoin and gold doesn’t look like totally substantiated. The on-chain analyst revealed that there have been as many constructive durations because the damaging ones, suggesting that the flagship cryptocurrency strikes independently of gold.
Darkfost wrote:
This means that BTC continues to evolve independently, with out clear proof of a sustained capital rotation from gold.
Moreover, Darkfost famous {that a} constructive sign doesn’t essentially imply that capital is flowing out of gold into Bitcoin. In accordance with the on-chain analyst, it’s merely not doable to find out whether or not there’s a capital stream relationship between the world’s largest cryptocurrency and gold.
Bitcoin & Gold Worth Overview
Whereas Bitcoin began the brand new yr on a fairly robust notice, the bullish momentum has just about waned over the previous two weeks. In the meantime, the gold worth has continued to flourish this yr, lately reaching a brand new all-time excessive above $4,900 per ounce.
As of this writing, the value of BTC stands at round $89,230, reflecting no important motion prior to now 24 hours. In accordance with knowledge from CoinGecko, the flagship cryptocurrency is almost 30% adrift its all-time excessive above the $126,000 degree.
The value of BTC on the each day timeframe | Supply: BTCUSD chart on TradingView
Featured picture from iStock, chart from TradingView
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