of bitcoin The property of not losing its value, preserving the purchasing power of the invested money and thus being an asset that is not affected by inflation is decreasing with each passing week.
90-Day and 60-Day Correlation With Bitcoin Price Below At All-Time Low
According to Coin Metrics data, it is the world’s largest cryptocurrencybacked by physical gold and indexed to gold PAX Gold (PAXG) Its 90-day correlation to the altcoin dropped to a record -0.41.
The 60-day correlation between Bitcoin and PAXG, on the other hand, dropped to -0.5 at the beginning of this month, which is also a record low.
This correlation was reversed in February, when the FED announced that it would try to solve low growth and high inflation values by increasing interest rates.
In correlation values, +1 indicates that the two assets are acting exactly the same, while -1 indicates that the two entities are acting completely opposite to each other.
“BTC Has Entered the Risky Asset Class Instead of Being a Savings Tool”
Noelle Acheson, an analyst at Genesis Global company, evaluated this development as follows:
“The reversal of the correlation of BTC price to gold shows the world’s largest cryptocurrency’s increasing correlation to major stock indices and entering the risky asset class rather than being a savings tool. In addition, it indicates that a price turbulence may be experienced after the markets absorb the effects of inflation and liquidity withdrawals.”
BTC advocates have long said that Bitcoin is a hedge against inflation, citing its limited supply of 21 million and its dwindling supply expansion every four years.
This year, the BTC price has dropped by as much as 12%, while PAXG and gold have gained more than 4%.
*Not investment advice.