Bitcoin’s correlation with gold has increased over the past couple of weeks, suggesting that the flagship cryptocurrency is once again on the verge of becoming a safe haven asset and a hedge against inflation. On the other hand, traditional finance (TradFi) markets continue to witness wild price swings, making the class an unfavorable choice for investors.

Bitcoin Correlation with Gold Hits 0.50

After a months-long stretch where Bitcoin traded basically as a risk asset, the leading cryptocurrency has seen its correlation with gold increase. As of now, BTC’s correlation with gold stands at 0.50, up from around zero in mid-August, Bloomberg reported, citing data by the Bank of America Corp.

It is worth noting that BTC correlations with the S&P 500 and Nasdaq 100, which stand at 0.69 and 0.72, respectively, are still higher. However, these correlations have decreased and are below record levels from a few months ago.

BofA digital strategists Alkesh Shah and Andrew Moss said the increasing BTC and gold correlation and the leading cryptocurrency’s decreasing correlation with major world indices is a sign that things could be changing. The duo wrote:

“A decelerating positive correlation with SPX/QQQ and a rapidly rising correlation with XAU indicate that investors may view Bitcoin as a relative safe haven as macro uncertainty continues and a market bottom remains to be seen.”

Bitcoin and Risk Assets Correlation Hit ATH in Early 2022

Bitcoin and risk assets have seen a growing correlation since the start of the year. As per a report by Bank of America, the correlation between Bitcoin and the S&P 500 hit an all-time high earlier this year in January. Bitcoin’s correlation with the Nasdaq 100 was also near all-time highs.

This came amid global economic headwinds and economic turmoil that began with COVID-19 and was exacerbated by macro events like the Ukraine war and China’s pandemic lockdown. Combined with rising inflation and interest rate hikes, this has led to a downward move in the value of stocks and crypto.

It is not very difficult to notice the relationship between Bitcoin and the stock market at the start of 2022. Over the past couple of months, a stock market crash has also dragged the crypto market down with itself.

This contradicts one of the main Bitcoin investment narratives put forward by crypto believers, which is that the flagship cryptocurrency could serve as “digital gold,” a safe haven free from the influence of decisions by central banks and governments, mainly because of its fixed supply.

As reported, in mid-June, gold managed to avoid steep sell-offs despite the bloodbath in the crypto market. While both gold and Bitcoin have suffered losses, gold has outperformed Bitcoin year-to-date. While the leading cryptocurrency is down by more than 58% YTD, gold is down by less than 10%.

As of now, Bitcoin is trading at around $19,380, up by more than 1% over the past day. The leading cryptocurrency is largely flat over the past month but down by around 72% compared to its all-time high of $69,000 recorded on November 10, 2021.

This article originally appeared on The Tokenist

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