Bitcoin Correlation with Gold Hits 6-Year High as Tech Link Fades

The correlation between Bitcoin and gold has reached its highest level since the 2020 pandemic. This shift comes as concerns about debt, deficits, and currency debasement regain attention after recent US developments.

Following a mid-August rally, which saw Bitcoin surge from under $65,000 to over $80,000 in response to the US Treasury's announcement of increased liquidity-support buybacks for longer-dated government debt, both assets' prices rose. The analysts at the Kobeissi Letter argue that BTC's increasing correlation with gold accelerated after this event, as investors treat both as protection against currency debasement.

Grayscale's Head of Research, Zach Pandl, supports this narrative, noting that the bitcoin-gold correlation has climbed from near zero at the beginning of the year to over 50%. Meanwhile, Bitcoin's 90-day correlation with the Nasdaq 100 has fallen from over 60% to around 30%-33%, a significant change from earlier periods when the cryptocurrency frequently behaved like a high-beta tech asset.

This trend suggests that investors are increasingly valuing bitcoin for its scarcity and monetary properties rather than simply treating it as a speculative risk asset. However, this substantial trend change does not mean that the relationship with equities has fully flipped.