Bitcoin turned heads this month when its value exceeded the price of gold, but just weeks later, the digital asset has fallen off the pace.
The digital currency surpassed the per-spot ounce price of gold on 2nd March, when it traded for $1,238 and gold was listed at $1,237 on the XAU/USD spot exchange rate provided by Bloomberg Markets.
The event marked the second time in history bitcoin was worth more than gold. This time round, bitcoin was trading high amid optimism that the SEC could soon approve a bitcoin ETF for retail investors.
Still, bitcoin didn’t enjoy this superior position for long. According to the CoinDesk Bitcoin Price Index (BPI), prices have fallen sharply since the eventual rejection – a trend that continued amid uncertainty about the future of its technical roadmap.
Days of glory
Overall, bitcoin’s price managed to trade higher than gold until 7th March, when prices fell below $1,200, BPI figures show. Gold prices, in comparison, closed at $1,215.86, according to Bloomberg data.
Bitcoin once again surpassed gold on 10th March, the day of the SEC decision, when its price surged to an all-time high of more than $1,300.
However, as the SEC rejected the proposed fund, bitcoin prices plunged, nearing $1,000. As a result, bitcoin once again traded south of gold, which closed the day at $1,204.64.
Bitcoin again popped up to surpass the precious metal on 12th and 16th March. The digital currency didn’t stay north of gold for long, and it fell below its precious metal counterpart later on 16th March.
Watch this space
With the prices diverging, it may be that this ends the latest attempt for the digital currency to live up to its often-used descriptor, ‘digital gold‘.
In fact, though, bitcoin and gold have frequently shown little relationship in terms of their price movements.
While the two assets have frequently displayed a strong price correlation during times of economic crisis, this relationship has often deteriorated once economic conditions calmed down. (A prior analysis of gold and bitcoin prices conducted by ARK Invest’s Chris Burniske failed to reveal a strong relationship between bitcoin and gold.)
Still, today there are several retail products that investors can use to trade gold. Bitcoin, on the other hand, lacks such securities.
As a result, the bitcoin-gold price relationship could change quite a bit going forward – and remains one to watch.
Gold bars image via Shutterstock