Bitcoin (BTC) traders could get cues from an apparent negative correlation that has developed between bitcoin and gold prices.
Gold picked up a strong bid at $1,196 on Nov. 13 and jumped to $1,300 on Jan. 4, possibly due to a sell-off in the weakening U.S. dollar. The greenback was down against most currencies in last two months of 2018 on growing speculation that the Federal Reserve (Fed) could decrease or pause interest rate hikes in 2019.
Bitcoin, however, did not benefit from that broad-based sell-off in the dollar. The cryptocurrency instead saw a revived bear market with a convincing move below $6,000 on Nov. 14 – a day after gold found takers around $1,200 per ounce.
That price action indicates that the two assets are inversely correlated. Validating that argument is the 90-day correlation coefficient of -0.593. The statistical measure ranges from -1 to 1, with a negative number representing the inverse relationship between the two variables, while a positive number implies direct correlation.
As a result, the leading cryptocurrency by market value could be influenced by the next move in gold prices. Currently, the safe haven metal is trading at $1,285, having hit a three-week low of $1,276 earlier this week.
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