The Research and Investment Directorate of Bitay, Turkey's fast-growing global stock exchange, drew attention to the similarities and long-term correlation between gold and Bitcoin, which are among the world's most popular investment instruments.
Bitay Research and Investment Directorate, operating within the body of Bitay, the first and only crypto-asset exchange from Turkey to the global market, drew attention to the correlation between gold, one of the most popular traditional investment tools, and Bitcoin, also called “digital gold”.
Bitay Analyst Alper Samet Yorak, in his article published on the Bitay Academy page, compares the change in the value of Bitcoin, which is the most popular and highest trading volume in the global crypto money markets today, with the long-term course of gold prices. The analysis draws attention to the fact that Bitcoin, which is the first crypto currency and makes up 41% of the total crypto money market, does not have an owner, a team and a board of directors, and in this aspect it differs from all existing cryptocurrencies in the markets.
Yorak states that gold, a rare metal that is valued by people all over the world, has always maintained its position as one of the most preferred traditional investment instruments throughout history. Yorak, who determined that the price of gold, which is a commodity that is always considered to protect its value due to its limited supply, always exhibits an upward trend, points out in his article that the features of "limited supply" and "rarity" are the common features between gold and Bitcoin. Yorak comments on the subject as follows:
“Bitcoin is an asset and an investment tool that can preserve its value in the digital environment, cannot be copied, cannot be produced in unlimited quantities, therefore, its supply is limited. This is the main reason for Bitcoin's relationship with gold, which has been valued tens of thousands of times since its emergence in 2008. People believe that Bitcoin, like gold, will maintain and increase the value of their assets over time.”
Alper Samet Yorak says that when the price movements of Bitcoin and gold prices are examined in the time series, the existence of a long-term correlation relationship between the two investment instruments in various periods attracts attention. For example, every 2008% increase in the price of an ounce of gold in the long term between 2020 and 1 corresponds to an increase of approximately 10% in Bitcoin prices. Although such a relationship cannot be mentioned for the short-term, the price movement of gold and Bitcoin's price movement continue to show a long-term correlation.
Yorak comments: “Additionally, the daily correlation coefficient, which fluctuates between -1 and +1 and measures the relationship between Bitcoin and gold, is in the positive territory and at 0,4. A level of 1 indicates full compatibility and correlation between the two entities, while -1 indicates an inverse and uncorrelated situation.”
Yorak emphasizes that after the economic crisis that affected Europe between 2012 and 2015, the ounce price of gold decreased from 1700 USD to 1000 USD, while Bitcoin experienced a decline from 1150 USD to 110 USD in the same period. Yorak points out that while the price of an ounce of gold increased by 2015% between 2017 and 50 (1050 USD -1530 USD), Bitcoin gained around 550% in the same period, rising from 340 USD to 1900 USD levels.
Again, between 2018 and 2019, gold rose by 1160 percent from $31 to $1530, while Bitcoin gained about 330% in the same period, rising from $3300 to $14.000. Yorak states that by evaluating long-term data, it can be said that there is a 1 to 10 correlation between gold and Bitcoin.
Why is Bitcoin also called 'digital gold'?
In his article, Yorak stated that the reason why Bitcoin is also called “digital gold” today is because the supply growth of both investment vehicles will slow down at some point in the future. Thus, he points out that the value of these assets increases as the demand increases or remains the same, as the increase in supply will slow down. In other words, there is a strong expectation that both Bitcoin and gold will increase in value in the long run. Finally, just as gold is the most popular and most valuable investment tool among commodities and precious metals, Bitcoin stands out as the most valuable and most reliable of all cryptocurrencies.
In his assessment, Yorak emphasizes that the correlation between these two assets may become stronger in the future due to their strategic importance: “In this period when access to the dollar is difficult, we see that the demand for gold in order to reach the dollar has increased in countries that have been removed from the global economy due to economic sanctions. Cryptocurrencies that are successful in creating alternative channels for participation in the financial system can price these political/economic developments with a strong correlation with gold in the future.”