Bitcoin Correlation with Gold Hits Extreme Levels Amid Debasement Trade

Bitcoin's correlation with gold has risen to extreme historical levels, indicating that investors are increasingly viewing it as a digital hedge against inflation. In the past 24 hours, Bitcoin's price dropped by 2.8% to $77,576.35, while gold's price fell by 3.37% to $4,455.43 per ounce.

This shift is evident in the data, which shows that BTC's 90-day correlation with gold has risen above 50%, while its correlation with the Nasdaq 100 has fallen from above 60% to around 33%. Bitcoin remains more volatile than gold, meaning it can rise more than gold when the debasement trade strengthens but also fall much harder when that trade reverses.

Adam Livingston, a Bitcoin expert, noted that BTC's correlation with gold is at extreme historical levels, while its correlation with tech stocks is relatively low. He compared this to 2020, when a similar setup produced 68 matching trading days between July 27th and November 27th, followed by Bitcoin's rise from $10,000-$11,000 to nearly $69,000 by November 2021.