Bitcoin's Gold Connection Deepens Amid Debt Concerns
Bitcoin's correlation with gold has reached one of its highest levels in recent years, but its relationship with technology stocks has weakened significantly. According to data from Bitwise Asset Management using Bloomberg data, Bitcoin's 90-day moving average correlation with gold has risen to approximately +0.50. This is more than double the level at the beginning of the year and marks one of the highest levels seen since the pandemic in 2020.
The Kobeissi Letter notes that this strengthening correlation between Bitcoin and gold accelerated after the US Treasury Department announced on August 19 that it would increase the limit for long-term bond repurchases from a minimum of $2 billion to $4 billion per transaction. This change has led investors to increasingly view Bitcoin and gold as similar hedging assets due to concerns about rising public debt and currency depreciation.
The fact that Bitcoin's correlation with Nasdaq is declining while its correlation with gold is rising indicates a strengthening tendency in the market to price Bitcoin not just as a risky technology asset, but as an alternative store of value. This shift could have significant implications for investors who are looking at Bitcoin as a potential safe-haven asset.