Bitcoin Gold Correlation Hits Six-Year High

Bitcoin's correlation with gold has reached a six-year high, according to Bitwise Investments. The firm's chart shows that the rolling 90-day correlation between Bitcoin and the gold spot price pushed above 0.5 for only the second time on record. This is significant because readings between -0.5 and 0.5 are traditionally classed as 'low' or 'no' correlation, meaning the two assets have only just crossed into meaningful co-movement.

The last time the bitcoin-gold correlation was that high was in 2020, following rounds of fiscal and monetary stimulus during the Covid crisis, said Bitwise Europe head of research André Dragosch. He noted that the shift implies 'some kind of decoupling between hard assets and the stock market.'

Dragosch added that Bitcoin has recently started to look like an amplified version of gold, as investors are discriminating less and less between bitcoin and gold as they navigate rising currency debasement risks. This is also reflected in Bitcoin's 30-day correlation with the S&P 500 falling towards zero during the August rally.

Bitwise chief investment officer Matt Hougan postured the choice for investors, noting that if growth strong enough to shrink the debt burden occurs, one wants to be long AI stocks. If inflation drives policy, one should be long Bitcoin. In either scenario, owning both could be a winning strategy.