Bitcoin's Correlation with Gold Hits Six-Year High
Bitcoin's recent behavior has been causing concern for investors who hold it and gold as separate hedges against inflation. According to analysis by Unchained, Bitcoin's correlation with gold is rising, meaning that it now moves more closely with gold than with technology stocks. This shift in correlation means that holding both Bitcoin and gold may not provide the protection that investors expect.
The analysis looked at daily prices for Bitcoin, gold, and the Nasdaq-100 going back to 2019 and found that Bitcoin's four-month correlation with gold now sits at 0.56, its highest reading since 2019. This means that on days when both markets are open, they tend to move together more closely than in the past.
This change in behavior is concerning for investors who have been using Bitcoin and gold as separate hedges against inflation. If they respond similarly to market changes, holding both may not provide the protection that investors expect. The correlation between Bitcoin and gold has swapped places with its correlation with technology stocks over the last six months.