Bitcoin is an extremely highly volatile 'asset' with nothing backing its value except optimism.

I can only guess that at this point whenever the market sees it increasing against the dollar the majority of the market immediately takes profit by transitioning to USD. Perhaps also most accepters of bitcoin use it as a USD proxy, so the price of say socks on whateveracceptsbitcoin.com isnt .05 bitcoins, but is whatever number of bitcoins equals $2.00 USD, and the bitcoins are immediately converted to dollars after the transaction is complete.

I think those ideas may explain what keeps bitcoin from exploding above its current correlation to USD, what keeps it from radically dipping, I have no clue.

> with nothing backing its value except optimism.

That's not strictly true. It's also backed by the undeniable utility of having a decentralized transaction log that is virtually impossible to compromise in an economically viable way.

"virtually impossible to compromise in an economically viable way."

Just like the enigma cipher...

Provable limited suppy backs Bitcoin. Its intrinsic value comes from its ability to move at the speed of light.

Agreed... I don't really understand why it moves opposite of gold either. Does that mean that bitcoin is considered a high risk asset instead of a safety asset?

I would say yes, with the volatility of bitcoin, at this stage in its life, it is considered a high risk asset. It doesn't have the historical precedent to be considered a safe asset, like other commodities

Is that just because gold is strongly anti-correlated to the dollar? I don't know for sure, just speculating.