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BTC Core insight: The 90-day correlation between Bitcoin and gold climbs to epidemic highs
The Ministry of Finance bond repurchase announcement is one of the key drivers driving up the correlation. As debt concerns intensify, how will this affect Bitcoin prices?
Bitcoin is approaching a "golden fork" form. Based on historical performance, this may be a bull market signal worthy of attention.
Narratives about Bitcoin and gold often emphasize the common contrast between the two assets. This is because they are at different risk levels. However, the price of Bitcoin occasionally has a high correlation with gold.
The latest bitcoin and gold data shows that the market has entered a rare stage in which the two assets show a high degree of correlation.
Bitwise data shows that the correlation between gold and Bitcoin has been rising and has just exceeded 0.50. This is the highest since the peak level observed in 2020.
Bitcoin and Gold Correlation Chart| Source: Bitwise
This correlation suggests that the two have shifted from their usual opposing relationship. In other words, Bitcoin currently behaves more like a precious metal.
What does this mean for Bitcoin prices and gold prices?
This correlation suggests that the market may view Bitcoin as a safe-haven asset, just like gold. This could provide insights into the trend of Bitcoin prices as U.S. debt problems become increasingly prominent.
André Dragosch, head of European research at Bitwise, pointed out that the correlation increased after the Ministry of Finance announced bond buybacks. He expressed the following views on this matter.
Dragosch also compared the surge in Bitcoin's gold correlation with previous peaks. He pointed out that government intervention is a common denominator, and bond buybacks highlight this recent one.
Analysts pointed out that the current challenges facing the U.S. dollar could benefit Bitcoin and gold. This means that debt-driven devaluation of fiat currencies could drive funds to gold and Bitcoin.
This phenomenon was already evident in August, when the price of Bitcoin achieved a monthly increase of 25%. On the other hand, gold prices rose nearly 10%.
The bond market is currently one of the biggest macro factors driving market sentiment. This means that what is unfolding will determine the market's response. According to the latest data, the situation has been favorable for Bitcoin and gold, and is likely to continue to show the same trend.
Bitcoin's "Golden Cross" sends a bull market signal again
In addition to the current comparison of Bitcoin and gold, Bitcoin prices also mark a major bullish signal. Its 50-day moving average is about to cross its 200-day moving average.
Bitcoin price is on the verge of a golden fork| Source: TradingView
This is the famous "golden cross" and is often regarded as a bullish signal. Past crossovers have often emphasized long-term upward trends. As a result, analysts see it as a potential sign of a bull market.
However, short-term price movements may favor a deeper correction below $80,000. The contrast between spot demand and futures demand supports this potential short-term outcome.
A recent CryptoQuant analysis showed that spot demand for Bitcoin is declining, while futures demand remains high. This ratio is usually favorable to short sellers, especially considering liquidation risks and subsequent volatility.
Source: CryptoQuant
Analysis points out that this observation may disrupt the recent upward trend. It is consistent with the short-term pullback narrative, which may also be accompanied by a surge in liquidations.
Historically, Bitcoin price actions have faced difficulties breaking through various price ceilings. This can take days or even weeks before gathering the critical mass needed for a breakthrough.
More interestingly, the timeline may coincide with the timetable for the Senate vote on the CLARITY Act.
