After an almost flat month, Bitcoin’s price is exhibiting subtle movements. In the last 24 hours, Bitcoin gained almost 4.6% pushing it slightly above $8,500. Price swell is not significant, then why are we even talking about it?
That’s because a peculiar gold and bitcoin buying/selling correlation was noticed by Su Zhu, CEO of Three Arrows Capital. Su Zhu tweeted a screenshot of his Bloomberg Terminal tool. And it is evident that while gold is being sold, more bitcoin is being bought.
Gold price bubble
Quite, recently the price of gold surged above its $1,550 mark. This happened in the light of the US airstrike on Iran. But as the tension eased, the price swell defused. On top of it, gold bug Peter Schiff also stated that gold is climbing a “wall of worry” and the bubble will pop soon.
But why Bitcoin?
For ages, gold held the position of a “haven” asset with an investment return advantage. But the fact is its value has failed to go up significantly in 2019. On the contrary, BTC, a digital haven asset exhibited a consistent price gain in the same year.
Today, both gold and BTC act as a flight currency on the surface. But at a microscopic level, the degree of scarcity is making bitcoin more valuable than gold.
Let us look at it from a numeric perspective.
Every year a fresh lot of 3,300 tons of gold enters the market and is bought by 8 billion world population. This means there is a limited every year supply entering the market. However, there is still a lot.
Now take a look at BTC. As we are just 120 days away from bitcoin halving, the number of new bitcoins entering the market will diminish further. Effectively, its scarcity continues to increase.
This gives BTC and other cryptocurrencies an edge over gold.
Whether this correlation stands true or not, the fact is that’s gold is being sold off while more bitcoin is being acquired. And that’s a piece of good news for the cryptocurrency market.