The correlation between Bitcoin and S&P 500 is increasing, while bitcoin and gold remain unrelated, although less sharply than a few days ago.
A chart revealed by Santiment shows the trend of the three assets from February to today:
Over the past month, #Bitcoin and the #SP500 have been correlating quite strongly, and that includes the mild decline over the past couple of days. Meanwhile, the inverse correlation between $BTC and #gold‘s price has calmed down significantly. https://t.co/dvQUHVrYEH pic.twitter.com/lpwJBvkpbx
— Santiment (@santimentfeed) August 19, 2021
From February to April, bitcoin, gold, and the S&P 500 had a trajectory set to the upside, and then in May, they took different paths. BTC saw its price halved, and thus the chart shows the downward direction, while gold and the S&P 500 remained set to the upside.
Gold and Bitcoin both experienced declines in June. Then Bitcoin started to rise again while gold continued to fall. In recent days, however, BTC has been trending similarly to the S&P 500 index.
The trend of the correlation between gold, Bitcoin, and S&P 500
Yesterday, in fact, both Bitcoin and S&P 500 had suffered a decrease. As for the S&P 500, the current drop comes after a non-stop rally. In fact, the index climbed up to 4,479.26 points marking a +100% from the lows of March 2020.
Driving this trend would have been, first and foremost, the monetary stimulus coming from the U.S. government. However, what triggered the current change of direction was not only a physiological retracement but also the recent publication of a Federal Reserve meeting from which it emerged that tapering (i.e., the end of economic stimuli) would begin by the end of the year.
For its part, gold has resumed growth in recent days, moving away from the critical level of 1,750 dollars an ounce. For gold, the obstacle to be overcome is the overcoming of 1,800 dollars an ounce. Gold could probably go through a consolidation phase before a possible attack on 1,850 and 1,900 dollars an ounce if it goes beyond this threshold.
But there are also high risks of a trend reversal, with a descent to 1,750 and then to the test of 1,720 dollars.
In this scenario in which Bitcoin also fails to break through $48,000, slipping back below $45,000, the debate about the rivalry between gold and BTC as a store of value comes back strongly.
Evolution Mining CEO Jake Klein recently joined this discussion and told CNBC:
“I think that the volatility in the crypto space is going to ultimately lead to people coming back to gold.”
Effectively, the descent of the gold price could be a great buying opportunity for investors. But Bitcoin is strong on the entry of many institutional investors, who are anointing it as gold 2.0.
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