These Two Charts Illustrate How Bitcoin did Against Gold in Recent Years

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Gold Via Unsplash - by Jingming Pan
Gold Via Unsplash - by Jingming Pan

Bitcoin enthusiasts and traders often describe cryptocurrency as an alternative to gold. However, the historical price action of Bitcoin might tell us otherwise. In fact, according to Bitcoin’s historical price action, the crypto is more closely related to stocks.

Investors believed that Bitcoin could serve as a hedge against inflation. But, these two charts below that depict relative performance amid recent stock market corrections explain that Bitcoin is more correlated to equities. 

The first chart illustrates that when stocks plunged almost 20% in the fourth quarter of 2018, Bitcoin fell as much as 50%. Meanwhile, gold traded up nearly 8%. Back then, the market volatility was caused by a hawkish Federal Reserve, and rising concerns about slowing economic growth because of trade tariffs.

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Koyfin
Koyfin

The second chart illustrates how the Covid pandemic in early 2020 caused Bitcoin to shed 50% of its value, while stocks plunged as much as 34%. On the other hand, gold traded flat stood as a safe-haven asset.

 

Koyfin
Koyfin

Today, following a 7% plunge in the S&P 500 since the start of 2022, Bitcoin plummeted 17% while gold is flat. These data charts can’t be wrong and are the best proof that Bitcoin is less of a hedge against inflation and more of a volatile risk-on asset that imitates stocks.

Technical analyst Katie Stockton of Fairlead Strategies highlighted this fact in a note on Friday.

“The correlation between bitcoin and high-growth benchmark ARKK still stands at ~60% year-to-date, versus ~14% for the price of gold, reminding us to categorize bitcoin and altcoins as risk assets rather than safe-havens,” she said. 

Gold acts as a reliable safe haven for several reasons. One reason why it does is that it has a history of thousands of years holding some form of value. Bitcoin on the other hand has turned 13 years old just lately.

When it comes to evidence-based investing, investors value more data than less, and gold has the data to back up its standing as a safe-haven asset, whereas bitcoin does not.