Bitcoin is again feeling the pull of gravity amid a rally in gold - a classic safe haven asset.
The cryptocurrency decoupled from equity markets and rallied by nearly $4,000 in May. Even so, the correction is noteworthy as it is accompanied by a sharp rally in gold prices.
During the same time frame, gold went from $1,200 to $1,300 and further extended the rally to $1,346.
By early May, gold was roughly down 6 percent from February highs, while BTC was trading at $5,500, representing a 76 percent rise on December lows near $3,100.
The inverse correlation weakened somewhat in May with gold trading the range of $1,300-$1,270 amid BTC's sharp rise to $9,000.
The two assets are again moving in opposite directions, as mentioned earlier.
Gold's recent rally is likely associated with markets aggressively pulling forward Federal Reserve interest rate cut expectations.
While gold - a zero-yielding asset - is cheering increased prospects of a drop in US borrowing costs, bitcoin is taking a hit, possibly due to chart-driven factors.
That said, the inverse relationship warrants attention and potential toppy price action in gold could be considered an advance warning of a bullish reversal in bitcoin.
Bitcoin image via Shutterstock; charts by Trading View.
Bitcoin and Gold Prices Diverge Again, Extending 5-Month Correlation
gepubliceerd op Jun 6, 2019
by Coindesk | gepubliceerd op Coinage
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