Bitcoin is reducing its correlation with the stock market and is transitioning to gold performance, a recent Bloomberg report stated. Amidst the current COVID-19 crisis, both assets will outperform stocks and emerge as the top winners.
The unexpected outbreak of the COVID-19 pandemic shook world economies and financial markets. The cryptocurrency space was not exempt from adverse price developments. However, a document Bloomberg's recent described that the main digital asset is declining in terms of volatility and is preparing to become a more stable asset amid the coronavirus crisis:
"This year will confirm Bitcoin's transition from a risk speculative asset to the gold version of the cryptocurrency market, in our opinion. From a volatility perspective, decreases in the reading of Bitcoin and increased changes in the stock market favor the crypto asset. ”
According to the newspaper, the latest movements in the stock market are pushing Bitcoin to "divorce" its correlation with stocks and instead to join gold. The assessment in the report "describes Bitcoin's 52-week correlation to the highest gold jump in our database since 2010." He also added that BTC's relationship with gold "is approximately double that of stocks."
Therefore, the maturation processes of cryptocurrency # 1 towards a storage mechanism of value similar to gold should continue, the report concluded.
In an attempt to combat the economic consequences of the coronavirus, world central banks and governments began to to print excessive amounts of money and quickly brought them to the markets. The report also touched on these drastic measures and predicted that BTC and gold are likely to make the most of the situation:
"Bitcoin and gold are also the main beneficiaries of the unprecedented monetary stimulus that is accompanied by an average reversal stock market."
Making a compelling prediction about the year-end gold price, the newspaper determined that it will break the previous record high and default $ 1,900. In a report of the Bank of America on the performance of gold, the gigantic institution declared that the precious metal could reach $ 3,000 next year.
Bitcoin, on the other hand, used the current situation of COVID-19 to differentiate itself from other cryptocurrencies, the report reasoned. According to the Bloomberg Galaxy Crypto Index, which measures the performance of digital assets through the combination of several indicators, the BTC ratio is recovering from a drop below its "52-week moving average with an upward slope", while others currencies are declining.