- The correlation between Bitcoin and gold became pronounced last year
- Bitcoin decoupled from its inverse relationship with interest rates
Investors started replacing gold with Bitcoin after spot Bitcoin exchange-traded funds (ETFs) were approved to operate in the US, according to ARK Invest CEO Cathie Wood, quoted by Cointelegraph.
Bitcoin is rising “relative to gold”
Wood said in an interview aired on YouTube that the market is witnessing “a substitution into Bitcoin” that will most likely continue thanks to the ETFs, which provide a more frictionless way to access Bitcoin.
She expects Bitcoin to prove itself as risk-mitigating instrument compensating for the traditional financial sector’s weaknesses.
According to her, the market saw this last March, when Bitcoin gained 40% against the backdrop of a “regional bank crisis” in the country. She said the move to Bitcoin was a flight to safety or a flight to quality.
According to an analysis by Fidelity, the correlation between Bitcoin and gold became more pronounced last year. Bitcoin decoupled from its inverse relationship with interest rates although the latter increased globally.
Data of Longtermtrends shows a very strong correlation (0.8) between Bitcoin and gold, stronger than it has ever been.
Wood is optimistic about Bitcoin’s price
Wood was not surprised by the big drop in Bitcoin’s price following ETF approval. Immediately after the launch, it was trading for $48,500 per 1 BTC. On January 24, it had fallen to $38,740, according to CoinGecko. Before ETFs launched, Wood predicted the funds’ market entry would help Bitcoin “sell on the news.”
She pointed out that the majority of Bitcoin in circulation - 15 million of 19.5 million – has not moved in more than five months. This might mean most investors are hodling Bitcoin.
ARK is offloading Coinbase, GBTC shares
ARK Invest currently holds 7.187 million Coinbase shares, worth a total of $843 million. The company held 11.43 million shares in June last year. It’s also offloading GBTC shares.
Wood’s company’s spot Bitcoin ETF, which launched on January 11, is called the ARK 21Shares Bitcoin ETF.
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