Bitcoin, contrary to earlier expectations of being a digital gold, has emerged as a proxy for market risk, aligning more closely with the AUD/JPY foreign exchange rate than gold itself. Recent data shows a strong positive correlation (0.80) between Bitcoin and the AUD/JPY pair, while the correlation with gold has dropped to -0.80. This indicates that Bitcoin has become a reflection of speculative sentiment rather than a safe haven asset. The ongoing U.S.-China trade war has intensified market volatility, pushing investors towards traditional safe havens. As the trade war escalates, the movements in Bitcoin prices now mirror those of riskier assets like the Australian dollar, which is sensitive to commodity demand influenced largely by China. Investors are monitoring the AUD/JPY pair not only as a risk indicator but also as a benchmark for Bitcoin's growing role in high-risk asset classes. The measure underlines a shift in Bitcoin's behavior, demonstrating its integral position in the evaluation of market risks rather than serving as a store of value commonly associated with gold.

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