Bitcoin is not a digital gold, at least in this cycle

Bitcoin was expected to be a digital Gold due to its limited supply. Thus, it was expected to be a safe haven financial asset where people & investors will park their money when risky assets depreciate. It was expected to appreciate in the bad times.

It doesn’t happen, BTC/USD usually behaves like a risky asset. The average 30 days (30d) correlation between BTC/USD and Nasdaq since 2014-10-17 was 0.27 and since 2020 when COVID-19 started and the market experienced big swings it was 0.50. This is especially true in 2022.

2022 is the year when COVID-19 financial bubbles are bursting, broad equity indexes are deflating, and a safe haven protection is in big demand. But positive correlation even increased. The average 30d correlation is 0.75.

Look at the chart of Bitcoin price and Nasdaq index change since the beginning of 2022. They went in sync till May and when Nasdaq started to decline in accelerated manner Bitcoin did the same but much faster. And when Nasdaq started modest growth after June 15 Fed meeting, Bitcoin did the same.



If we look at BTC/USD and Nasdaq 30d correlation chart since 2014-10-17, you will see that the current period of positive correlation is the highest one in this period of time.

This tells us that Bitcoin is a risky speculative asset which correlates positively with prices for other risky assets. Specifically, Bitcoin correlates well with Nasdaq index which reflects stock prices of technology companies.





Bitcoin is a new technology which is still in early period of its lifecycle called adoption. May be it will get characteristics of a digital Gold, but this will not happen until adoption is over, Bitcoin acceptance is widespread and price volatility is low.

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Tags: Crypto