Gold on steroids? Bitcoin, gold link to rise in 2023 – Loyalty

According to a recent report by asset manager Fidelity, the correlation between Bitcoin (BTC) and gold has increased beyond 2023.

According to Fidelity's analysis, bitcoin's price has historically been inversely related to interest rates, even rising globally, even as higher interest rates reduce demand for risk assets. Over the past twelve months, gold prices have followed a similar pattern:

“But this past year, we've seen a complete unraveling of this relationship as real rates have grown (inflation has slowed and at the fastest rate in history) and Treasury yields have skyrocketed, not just with bitcoin, but with the rally! This may be E.T. “Could it be due to an idiosyncratic event like waiting for .P.? But we don't think so because gold has been showing similar behavior recently.”

In the year Gold experienced significant volatility in 2023, but overall performed strongly against several currencies. For the year, gold has outperformed the US dollar by 14.6%, with significant differences between different currency pairs. Asset performance was driven primarily by geopolitical concerns and interest from central banks. Bitcoin, meanwhile, has gained 156 percent by 2023.

“Historically, bitcoin has long been uncorrelated with gold, but has recently seen an increase in correlation as the two converged,” Fidelity said.

The investment firm speculated that the reasons for the increased correlation between the commodities could be that investors are looking at the growing fiscal deficit of the United States or anticipating a change in interest rates.

“What these real estate markets might say is anyone's guess, but one possible explanation is that either bitcoin or gold may be misaligned by the bond market, or both assets are saying they're looking for something else, such as the United States' increasingly large and structural fiscal deficits. Perhaps Bitcoin's While the market may be anticipating additional debt monetization or deflation by the Federal Reserve, our research shows that Bitcoin's price is not related to consumer inflation, but to inflation in the money supply itself and various measures of liquidity.

Fidelity's analysis suggests a tight supply environment for Bitcoin, as the proportion of long-term holders has reached another all-time high of 70%. “It appears to us that the last few years of the bear market have created some very strong hands in terms of holding time. With Bitcoin's 160%+ rally[as of mid-December]we haven't seen these long-term, illegal coins move in price response to take profits.”

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