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Aug. 24, 2019, 3:15 p.m. EDT

Here’s what bitcoin’s relationship with the stock market and gold looks like over the past 90 days

Bitcoin starting correlate with gold, stocks

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By Mark DeCambre, MarketWatch

The world’s No. 1 cryptocurrency, bitcoin, has enjoyed a very loose relationship with other assets during its brief history, but that could be changing, a recent chart shows.

A report from Digital Asset Data illustrates (chart attached) that over the past three months, bitcoin has moved in tandem with gold and has swung inversely to moves in the stock market.

That theory may explain why bitcoin /zigman2/quotes/31322028/realtime BTCUSD -2.72% was seeing a sizable slump Wednesday afternoon, with bitcoin futures trading on CME Group , for example, down 6.1%, while the Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA -4.06% , the S&P 500 /zigman2/quotes/210599714/realtime SPX -3.37% and the Nasdaq Composite indexes /zigman2/quotes/210598365/realtime COMP -3.79% were punching considerably higher.

In statistical terms, correlation is defined as the tendency of assets to move in the same direction over a given period. Perfect positive correlation, in which two securities move in complete lockstep, is represented by the value 1 (or 100%). In perfect negative correlation, represented by negative 1.

Read : Facebook already faces ‘the first real competitor’ to crypto Libra

In this case, Digital Asset researched the return for gold prices /zigman2/quotes/211755585/delayed GC.1 +1.77% , the SPDR S&P 500 ETF Trust /zigman2/quotes/209901640/lastsale SPY -2.98% , a popular exchange-traded fund against bitcoin over a rolling 90-day period. The report shows that as the S&P 500 has skidded lower, bitcoin and gold have gained.

To be sure, the correlation may not be statistically significant but Digital Asset makes the case that it is evidence of a maturing view of bitcoin as a store of value along with gold.

“The findings tend to signal that Bitcoin is starting to behave more like a store of value and is potentially being used as a safe-haven asset during global uncertainty in traditional markets,” Ryan Alfred, president of Digital Assets Data in a statement.

Bitcoin enthusiasts have mostly positioned the crypto as an asset that is the most uncorrelated against others and therefore is being perceived as a good alternative to traditional securities.

Bitcoin is still widely viewed as an unconventional holding but experimentation with blockchain, the technology that underpins most digital assets, by traditional companies has garnered bitcoin and its ilk greater attention and legitimacy.

Facebook’s attempt to rollout Libra coin, a cryptocurrency aimed at facilitating global payments and JPMorgan Chase & Co.’s /zigman2/quotes/205971034/lastsale JPM -7.12% JPM coin, a digital asset intended to address settlements in the banking industry are often cited as recognition of the natural evolution of cryptocurrency toward a genuine purpose.

Oct. 31 marked the 10th birthday of one of bitcoin, created back in 2009 by a person or persons known as Satoshi Nakamoto, resulting in one of the more divisive technological advancements of the 21st century.

US : CoinDesk
-170.35 -2.72%
Volume: 0.00
March 29, 2020 5:58a
US : Dow Jones Global
-915.39 -4.06%
Volume: 591.33M
March 27, 2020 5:12p
-88.60 -3.37%
Volume: 3.59B
March 27, 2020 5:12p
US : U.S.: Nasdaq
-295.16 -3.79%
Volume: 3.45M
March 27, 2020 5:16p
US : U.S.: Nymex
$ 1,623.90
+28.20 +1.77%
Volume: 0.00
March 27, 2020 5:09p
US : U.S.: NYSE Arca
$ 253.42
-7.78 -2.98%
Volume: 224.34M
March 27, 2020 8:00p
$ 91.13
-6.99 -7.12%
Volume: 30.04M
March 27, 2020 6:30p
P/E Ratio
Dividend Yield
Market Cap
$280.13 billion
Rev. per Employee

Mark DeCambre is MarketWatch's markets editor. He is based in New York. Follow him on Twitter @mdecambre.

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