Bitcoin's Gold Correlation Hits Six-Year High Amid Bond Market Influence

The correlation between Bitcoin and gold has reached its highest point in six years. According to data from Bitwise, the 90-day correlation between the two assets hit +0.50 in early September, a level not seen since 2020. This means that over the past three months, Bitcoin and gold have often moved in the same direction.

However, this correlation is not without its caveats. Eric Balchunas, Bloomberg's ETF analyst, notes that Bitcoin has always had a relatively stable relationship with US stocks, holding near 0.40 against them. It was gold and Treasuries that became more correlated with each other.

The bond market has played a significant role in driving this correlation. The Treasury's announcement of increased long-dated bond buybacks led to a surge in liquidity, causing both Bitcoin and gold to move together. As the 30-year yield rose to 5.38%, oil prices stayed above $100, and the Federal Reserve signaled potential interest rate hikes.

The question remains whether this correlation is temporary or structural. Glassnode notes that sudden decouplings during heavy sovereign bond selloffs have historically proven temporary, pointing to local exhaustion rather than a lasting shift.