Dr. bitcoin? Goldman says cryptocurrency’s meteoric rise is tracking a key proxy for

Analysts at Goldman Sachs have identified a surprisingly similar trend between the world’s most valuable virtual currency and a base metal with a reputation as a barometer for the global economy.

Bitcoin and copper prices have both been on a tear for most of this year, hitting record-highs amid the ongoing coronavirus pandemic.

“Both institutional investors and wealthy individuals avoid cryptocurrencies due to its inherent transparency issues, while speculative retail investment causes Bitcoin to act as an excessively risky asset,” analysts at Goldman Sachs said in a research note published Thursday.

“In fact, since the depths of the first lockdown Bitcoin’s rise has closely tracked that of copper, a key proxy for global growth,” they added.

Bitcoin prices have skyrocketed. The volatile cryptocurrency, in a move that reminded many market participants of a similar rally in 2017, climbed above $20,000 for the first time in its history on Wednesday.

It has since breached $23,000, according to crypto market data provider Coin Metrics, before paring gains on Friday to trade at around $22,899. In mid-March, during the first wave of the coronavirus pandemic, bitcoin traded below $5,000.

The rising popularity of bitcoin has seen it become an asset that is widely traded, much like fiat currencies.

Meanwhile, copper prices breached $8,000 per metric ton on Friday, its highest level since February 2013. Three-month copper prices on the London Metal Exchange have since pared gains, trading at $7,991 during lunchtime deals.

The commodity is up more than 28% year-to-date, on pace for its fourth positive year in five.

Copper’s 2020 bull run coincides with a rally among other stocks and risk assets in recent weeks, with market sentiment improving on positive news about Covid-19 vaccines.

Copper — sometimes dubbed Dr. Copper — has a reputation among market watchers as a barometer for the global economy. The base metal is viewed in this way because of its broad range of end-uses — both in construction and in consumer products such as cars and consumer appliances.

Earlier this month, Goldman Sachs said it was “highly probable” that by the first half of 2022 copper prices would test the existing record highs of $10,170 set in 2011.