Bitcoin And Gold Grow, But One of Them Without Help From the Fed

If we take a look on crypto and stock markets, we will see that they started to recover their losses. Reacting to the quantitative easing action taken by the Federal Reserve (Fed), Bitcoin (BTC) and gold started to grow. However, the stock market was not that quick to recover. According to reports, the price of gold had dropped by 12% from its March peak at $1,700 to $1,460 last week.

The precious metal started the new week with a green candle and marched upwards. It has managed to gain 6.49% since March 23.

It was traded at $1,612.04 at the time of writing.

The price of Bitcoin has also been playing a tug-of-war, with the bulls taking over at one moment, and the bears at the other. Despite the rise and fall, the world’s most popular cryptocurrency has managed to gain 8.63% since March 23 and was trading at $6,557.17, at the time of writing.

The correlation between the two assets seemed to be rising as well, after recording a steep downtrend over the last week.

Bitcoin/gold price correlation. Source: Coin Metrics

The data provider Skew notes that “CME COMEX Gold Futures traded $100bln volumes yesterday and options $20bln notional”.

While BTC futures on CME also reflected interest from institutions, for the last five days, Bitcoin volume has been around $300 million, with the Open Interest (OI) staying at $132 million.

Despite the recovery showed by both store of value rivals, gold’s market has been reacting in interesting ways to the sinking financial market. On Monday, March 23, the Fed had stated that it would buy unlimited amounts of government bonds, while the following day Goldman Sachs comment on gold being at its inflection point stirred activity on the market, as reports state.

John Ciampaglia, chief executive at Sprott Asset Management, stated that the rising price of gold resembled the situation in 2008 and 2009, when central banks had turned the printing press on full speed. Now we see the same happening in the market, as the Fed injected liquidity in the market.

However, unlike gold, Bitcoin does not need help from the Fed, touting a sensible recovery since its March 12 decline with its limited supply and market sentiment.