There are many factors that affect the price of gold of course; two that we track very
closely are the US dollar and the US 10-year TIPS yield. When the dollar rises, all else constant, gold declines. Similarly, when the TIPS yield rises gold declines. Therefore, in order to estimate the impact bitcoin might have on gold these days we need to control for the impact of the dollar and the TIPS yield on gold. One way to do this is with regression analysis. To set up the analysis we hypothesize that the price of gold is a function of the price of the dollar, the 10-year TIPS yield, and the price of bitcoin.
The results show that the decline in gold can indeed partly be attributed to the rise in Bitcoin. The rise in the 10-year TIPS yield had the most impact, followed by the rise US dollar, and then the rise in Bitcoin.
