Bitcoin ended 2022 with a price below $17,000. This means that for the time being, the price of digital gold has recovered up to 49.5%. While this recovery is still far from the peak price Bitcoin reached in November 2021, compared to other asset classes, this is a very impressive gain.
Gold is a good example to compare with Bitcoin. According to a tweet from Glassnode on June 14, buying one Bitcoin requires 13.3 ounces of gold, a significant increase of 46% since the beginning of the year. However, this ratio is still far from the peak (37) reached during the bull market in 2021. However, if we compare the lows during the Covid-19 pandemic, This growth has reached 430%.
If we look at the price movements of these two assets, we can see that Bitcoin is completely outperforming gold in the real world. While the value of BTC has increased by almost 50% year-to-date, the price of gold has only increased modestly, only about 6.4%. An optimistic way to explain this disparity is that the market may be favoring digital assets over precious metals as a hedge against inflation. This once again reinforces the narrative of Bitcoin being a safe-haven asset.
In fact, the comparison between Bitcoin and gold becomes even more pronounced in terms of safe-haven assets. At the time of the banking crisis in the United States in March, the price of Bitcoin has increased by 21% since then. Meanwhile, gold is only up 4% in the same time, only showing its less fortunate and more stable than Bitcoin.
In recent months, Bitcoin has been showing a growing decoupling from gold. Data from Glassnode shows that the BTC/XAU correlation has dropped to 0.17 since June 14. This is a very low level from its multi-year high in April. This shows that Bitcoin is being viewed as an independent asset class with its own fundamentals, unaffected and unaffected. driven by real-world fluctuations.
Even so, Bitcoin’s impressive performance against gold could completely reverse at any time. The capitalization of Bitcoin, and the crypto market in general, is still only a tiny fraction of that of the gold market (capitalization is over $13,000 billion). For that reason, from another perspective, BTC is still considered a volatile asset class.
Not to mention the regulatory environment in the US and the complexity of macroeconomic factors, which could easily wipe out the gains BTC has made this year. In fact, at the moment, investors are actively holding stablecoins as a way to preserve profits during volatile times and are ready to “buy on the downside” when the price corrects in the future.