Bitcoin Correlation With Gold At Multi-Year High Surpassing US Equities

The world’s largest cryptocurrency Bitcoin (BTC) delivered a very strong performance during the first quarter of 2023 by gaining nearly 70%. Currently, the BTC price is under consolidation at around $27,800 levels.

As we know, Bitcoin has outperformed almost every other asset class this year including physical gold and US equities. Also, as per the blockchain analytics firm Kaiko, Bitcoin’s correlation with gold touched a multi-year high last week and is currently around 50%.

Interestingly, this BTC-Gold correlation has surpassed Bitcoin’s correlation with US equities. For a long period of time, BTC has shown a close correlation to the US equities, however, it has outperformed all three indices by nearly four times in Q1 2023.

Kaiko shows, Bitcoin’s correlation with the S&P 500 which is up 7.86% year-to-date. On the other hand, Gold gained somewhere around 8.6% during the first quarter. Outperforming all of these asset classes is Bitcoin which is up 70% since the start of the year.

On the other hand, the share of Bitcoin holders is also increasing simultaneously. Amid the current banking crisis, BTC has once again emerged as a safe haven asset.

Bitcoin and Nasdaq Volatility

Among US equities, Bitcoin has always shown a greater correlation with the tech-heavy Nasdaq index. The Nasdaq 100 index has also made a good recovery gaining more than 20% from December 2022 and technically entering a bull market.

On the other hand, the gap between Bitcoin and Nasdaq volatility has reached the highest level ever since the collapse of the crypto exchange FTX in November 2022. The report from Kaiko explains:

The surge in BTC volatility is partly liquidity-driven, as market depth remains at a multi-month low. It’s unlikely to go away as the largest and most liquid exchange, Binance, now faces regulatory pressures that could exacerbate risk aversion among market makers.

As we reported, Bitcoin could experience greater volatility ahead this month as liquidity dries up majorly.