Correlation between Bitcoin and gold rises to six-year peak!

Correlation between Bitcoin and gold hits a six-year high

During the recent market volatility, the correlation between Bitcoin and gold climbed to its highest level in about six years. Bitwise data shows that the price movements of the two assets have become increasingly convergent over the past 90 days, while discussions about the intensifying impact of macroeconomic factors on Bitcoin have once again become the focus.

In this process, the sell-off in the bond market and the rise in long-term U.S. Treasury yields played an important role. During the same period, Bitcoin and gold prices rose, while stock markets performed relatively weakly. This phenomenon has raised questions in the market about whether Bitcoin is decoupling from traditional risky assets.

Why did Bitcoin and gold rise simultaneously?

After the rise in U.S. long-term Treasury bond yields triggered significant market price fluctuations, both bitcoin and gold appreciated as U.S. Treasury Secretary Scott Bessent announced an increase in long-term Treasury bond purchases.

According to André Dragosch, Bitwise's director of European research, Bitcoin rose 22.4% in the month after the news was released. This is one of the strongest weekly gains for Bitcoin since March 2024. During the same period, gold rose by about 5%, while stocks fell. The combined strength of both assets suggests that investors are re-examining their portfolio allocations in the face of growing economic uncertainty.

The 90-day data released by Bitwise also showed that Bitcoin turned negative with the U.S. dollar index at the end of August. The company pointed out that the weakening of the US dollar has become an important factor supporting digital assets and gold.

When was the last time the similarity between Bitcoin and gold appeared?

Dragosh pointed out that the last time the correlation between Bitcoin and gold reached a similar high was in 2020. At the time, governments and central banks implemented extensive fiscal and monetary stimulus measures to mitigate the impact of the COVID-19 crisis.

Analysts believe that during a period of increasing macroeconomic pressure, investors have begun to pay less attention to the difference between Bitcoin and gold. Recently, Bitcoin has behaved like an alternative asset with a higher volatility than gold under these conditions.

However, this similarity does not mean that the two assets will permanently move in the same direction. Because correlations change rapidly with market conditions, a broader data set needs to be evaluated when making investment and market analysis decisions.

Why is the link between Bitcoin and the S & P 500 weakening?

Glassnode analysts said the 30-day correlation between Bitcoin and the S & P 500 index was close to zero during the August rally. During the same period, the U.S. stock market as a whole showed a sideways consolidation trend.

Analysts stressed that correlations could change sharply during a period of fierce selling of national bonds. But historical data shows that such changes usually do not last long.

Therefore, the current divergence is more likely to reflect a short-term exhaustion or temporary repricing process than a lasting shift in market mechanisms. When assessing Bitcoin's relationship with other assets, relying solely on short-term correlation data can be misleading.

Eric Balchunas, a senior ETF analyst at Bloomberg, also said that over the past six months, Bitcoin has been less correlated with U.S. stocks than gold, small-cap stocks, emerging markets and U.S. Treasuries. Bitcoin's correlation has remained around 0.40 for a long time, while the increasingly close connection between gold and U.S. Treasury bonds is particularly prominent.

What do the BTC price and profit margin indicators show?

Bitcoin fell back again after breaking through the US$80,000 mark at the end of August. Although BTC's monthly increase is about 25%, the price is currently stable at around $77,800 after hitting around $76,000.

According to Glassnode data, long-term holders have accumulated a large supply of bitcoin in the US$83,000 to US$86,000 range. The main areas of stronger accumulation are between US$62,000 and US$65,000.

At the end of August, when Bitcoin was trading at approximately US$78,000, 68% of the total BTC supply was profitable. At the same price level in May, the proportion was 65%.

During the strongest period of gains, the average daily capital inflow of spot Bitcoin ETFs was US$290 million. During the same period, the average daily trading volume of Bitcoin ETFs remained at approximately US$3 billion.

Disclaimer :This content does not constitute any investment advice. Markets are characterized by high risks, so please conduct independent research before making investment decisions.