Bitcoin Ditches Tech Stocks, Moves in Step with Gold as Safe-Haven Assets

Bitcoin has been moving closer to gold and away from tech stocks, according to an analysis by Grayscale. In August, the asset manager reported that signs are emerging of bitcoin's safe-haven character resurfacing.

The correlation coefficient between Bitcoin and the Nasdaq 100 index fell to about 33% from above 60%, while its correlation with gold rose to above 50% from near zero at the start of the year. Grayscale pointed to worsening U.S. fiscal conditions and rising long-term interest rates as background factors.

U.S. federal debt has surpassed $40 trillion, and long-term Treasury yields have risen sharply over the past year. This is reviving interest among investors in a 'debasement trade' that shifts money into scarce assets such as gold and cryptocurrencies to hedge against a decline in the real value of currency.

Grayscale said that as concerns about fiscal deterioration grow, Bitcoin could become an asset allocation target as a scarce alternative asset alongside gold. The U.S. Treasury's recent decision to expand long-term Treasury purchases has added weight to the discussion.