The Wall Street Journal reported on December 28 that according to data from the research company Excalibur Pro Inc., Bitcoin [BTC] traded with a correlation of 0.84 to gold in the last week. This is not entirely unexpected news, they say, given that many investors in traditional markets have invested money in the BTC network, and therefore Bitcoin behaves like a traditional resource, even if very risky.
A score of -1 means that BTC and gold are perfectly inversely related. A score of +1 indicates a perfect correlation between the prices of BTC and gold, which means that price fluctuations of BTC increase even as gold prices rise.
Bitcoin and other cryptocurrencies have always courted the influx of money from the institutions. This support for research and development of new use cases fuels the growth of cryptocurrency, both in terms of value and popularity. The Journal cites examples of institutional money like the Bitcoin Investment Trust, sold by Grayscale Investments. Throughout 2018, Grayscale's Bitcoin Investment Trust (GBTC) earned more than $ 1B, but fell below this figure and is now approaching $ 900 million. In particular, GBTC is the only stock available on the stock market whose main asset is Bitcoin.
The Journal holds the position that Bitcoin's correlation with traditional markets will only get closer as time passes. Traditional capital continues to enter the cryptocurrency markets and some cryptocurrencies try to attract further institutional support by complying with regulations and construction services such as futures trading. CoinDesk data show that venture capital in the investment and blockchain area has grown over the years, reports the Wall Street Journal, from $ 96 million in 2013 to a total of over $ 2 billion in 2017.
Bitcoin has been dubbed "digital gold" and is believed to be a store of value, very similar to gold. During the bull run at the end of 2017, one might be forgiven for thinking that Bitcoin has little in common with the way traditional resources behave and would be an alternative financial system. Yet it has had a very troubled year in terms of prices, down nearly 80% from its peak in December 2017. As a resource, with the flow of money from traditional investors, it is quite plausible that BTC increase and decrease on the basis of gold, a consolidated reserve of value.
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