It seems that Bitcoin (BTC) has a stronger correlation with the gold than previously assumed. According to an article released from The Wall Street Journal (WSJ), Bitcoin had a strong correlation with gold in recent days.
As the data of Excalibur Pro Inc. show, Bitcoin had a correlation of 0.84 with gold during the last five dates. In this scale, -1 indicates a complete inversion and +1 a perfect correlation. In general, a 0.84 can be considered a strong correlation. At the same time, there was also a 0.77 correlation with the volatility index of the CBOE (Chicago Board Options Exchange) (VIX). The VIX index measures the volatility expectations of the stock market.
According to Alex Krüger, a recognized cryptographic analyst, the short-term correlations between BTC and S & P 500 are unstable and oscillate around zero. Furthermore, the 180-day correlation between S & P 500 and Bitcoin is 0.
Bitcoin has been positively correlated with the S & P 500 since the end of the year. However, short-term correlations are unstable and oscillate around zero and the 180-day correlation stands at 0. pic.twitter.com/AW1GdQPLMV
– Alex Krüger 🇦🇷 (@Crypto_Macro) 3 December 2018
The WSJ offers some explanations on why this happened in the market. The first thing they say is that there was a greater influx of institutional investors into the cryptocurrency market.
For example, one of the companies investing in Bitcoin is in grayscale investments. According to WSJ, the company had $ 51 million of assets under management in 2013. However, by the end of 2017, it managed $ 3.5 billion. After the bear market experience in 2018, the company has under management $ 900 million in assets.
Another important thing to take into consideration and that the report shows is related to venture capital investments (VC). The WSJ reports that in 2013, the VC investment in the most popular virtual currency and blockchain industry was close to $ 96 million. In just three years, this amount has grown over 5 times and reached $ 500 million in 2016. In 2017, VC investments continued to grow to $ 2 billion.
At the same time, the cryptocurrency space is trying to create an institutional infrastructure for traditional and large investors to enter the market. In addition, the US Securities and Exchange Commission (SEC) could soon approve the first Bitcoin Exchange Traded Fund (ETF) in 2019.
The Intercontinental Exchange (ICE) is one of the companies that is about to launch a platform known as Bakkt and that is specifically designed for institutions. In addition, Fidelity Investments has opened a new brand of digital resources that will also work with cryptocurrencies.
In order for companies to continue to enter the market, regulatory agencies will need to continue to create clear legal frameworks on blockchain technology and virtual currencies. Some of these countries that are working in clear environments for digital resources are Japan and Malta.