Bitcoin continues to prove to its critics as being a ?safe haven? asset on the global stage. The correlation with the flagship crypto to other markets has been shifting from time to time. Bitcoin?s correlation to the stock market was very strong in the late February and early March.
However, this correlation has since broken and the flagship crypto is now becoming more closely tied to Gold and other precious metals. Data from analytics firm, Skew indicates that the correlation between Gold and Bitcoin is now the closest ever. Its one-month correlation recorded an all-time high at nearly 69% just some few weeks ago, before dropping to its current levels at 49.4%. This is still a significant rise from its one-month annual rolling average of 12.8%.
Notably, BTC?s newly formed correlation to traditional safe haven assets has caused it to form an inverse correlation to the U.S. Dollar. Over the past few weeks, Bitcoin and gold?s price seems to witness a massive uptrend whenever the value of the U.S. Dollar dips.
While speaking about the current technical outlook of the U.S. Dollar, one analyst said the currency appears to be forming a bearish flag. He posted a chart on Twitter explaining that it looks more like ?a bear flag getting ready to break down?.
He claims this potential crash of the U.S dollar would be bullish for Bitcoin and precious metals such as Gold. This event could propel BTC above $12,000 and trigger its next massive increase.
The recent strong correlation between Bitcoin and precious metals could likely be due to investors growing fearful about imminent inflation due to excessive money printing by governments. As such, demand for safe-haven assets has witnessed a significant growth.
Though Bitcoin?s potential status as a safe haven asset were invalidated after it witnessed a massive crash in the mid-March, the narrative has since then come to fruition with its latest strong correlation with precious metals.