Bitcoin is outshining again; is 2023 BTC’s year?

• Bitcoin has shown increased decoupling from the main asset classes of the traditional market.
• BTC’s correlation with gold retracted from its all-time high to stand at 11% as of 31 May. 

Over the last few months, the world’s largest crypto asset by market cap Bitcoin [BTC] gained an upper hand over other major commodity assets of the financial market. As per on-chain analytics firm Glassnode, the king coin outperformed Crude Oil, Gold, and Silver to clock a 14.5% growth rate over the last three months.

While the price of Crude Oil fell by 4% in the same period, there was some good news from the bullion market. This was because precious metals like Gold and Silver grew by 7.5% and 12.7% respectively.

Bitcoin emerging as a safe-haven asset?

The fact that Bitcoin’s growth came amidst the U.S. banking crisis reinforced BTC’s long-supported narrative of being a safe-haven asset. A safe-haven asset is one whose value is anticipated to remain stable or increase through periods of economic downturns.

The crisis prompted many investors to dump their bank stocks and transfer their funds into the crypto economy, more specifically, Bitcoin.

In recent months, Bitcoin has shown increased decoupling from the main asset classes of the traditional market. According to Kaiko, a source of market statistics for digital assets, Bitcoin’s correlation with Gold dropped to 11% from a multi-year high of 50% in April.

In addition, since the beginning of 2023, the virtual currency’s correlation with American stocks fell considerably. This indicated that Bitcoin was increasingly seen as an independent asset class.

#Bitcoin's correlation with #gold has retraced from all time highs, and currently sits at 11% pic.twitter.com/QGdJvSX5qz

— Kaiko (@KaikoData) May 30, 2023

These factors could be at play

One of the key reasons why Bitcoin can prove to be a legitimate store of value is its scarcity. In less than a year, Bitcoin will undergo yet another halving event that will further cut down the rewards paid to miners for producing blocks. This essentially means that Bitcoin is a deflationary asset. Furthermore, the issuance of coins will decrease over time, resulting in significant value appreciation.

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But it was not just speculative interest driving the value of Bitcoin. It has seen a remarkable increase in its utility since the start of 2023 with the Ordinals protocol paving the way for the creation of non-fungible tokens (NFTs), coins, and stablecoins on the network.

This has piqued the interest of retail investors, as evidenced by the growing number of addresses holding less than 10 BTC. However, the coin’s weighted sentiment remained neutral and didn’t shift in favor of any one particular market emotion.