The bitcoin, the digital gold that some thought, acts like Aud-Jpy FX Market Risk Gauge
President Donald Trump’s trade war has introduced significant volatility to financial markets since March, motivating investors to chase the properties they believe providing a fence in this turbulent environment.
What is clear: bitcoin (Btc) is not one of them, more than the frustration of investors who have long been thought of the biggest cryptocurrency as digital gold either as a store of value or a refuge in shelter. The fact is that since the start of the trade war, Bitcoin has become closer to the Aussie dollar-yen (AUD/JPY) pair, the barometer of the foreign exchange market risk.
Data from TradingView shows the 90-day coefficient of touch between Bitcoin and the AUD/JPY pair that flipped positively in late February and since hitting the highest since November 2021. The title tariff war between the two countries has led to a terrify Federal Reserve Chairman Jerome Powell who returned to the risks on Wednesday.
The correlation of 0.80 – the maximum value is 1 – is considered powerful, indicating that the two variables, BTC and AUD/JPY, are closely related to their movements in both directions.
In contrast, Bitcoin’s 90 -day relationship with a gold flipped negative in late February and from the downfall to -0.80, just above the minimum -1. This means that the two are closely related to their movements, but in opposite directions.
Btc, a proxy for risk
The Australian dollar, which is sensitive to China and the money in the home of a nation that has a commodity, is seen as a risk of currency. Yen is a safe shelter because Japan has been a net international credit for decades with interest rates near zero.
When global markets are optimistic and increased commodity demand, AUD is usually appreciated, reflecting an increased risk of appeal to investors and drops of yen. The opposite is true when they become risk-averse.
Therefore, entrepreneurs will monitor AUD/JPY as an indicator of risk, viewing increases as positive signs for risk possession such as stocks, and vice versa. Bitcoin, Which is emerging in a comparable paperIt strengthens its position. The correlation data indicates that the BTC is now a proxy for the sentiment of risk as AUD/JPY.
