Bitcoin correlation with gold at highest level in nine years

Bitcoin is increasingly moving in lockstep with gold and increasingly less with technology stocks. The 90-day correlation between Bitcoin and gold has risen to 0.56, the highest level since data providers began this measurement in 2017. At the same time, the correlation with the Nasdaq 100 is falling to around 0.30, a one-year low. That is according to Protos.

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In brief:

• The 90-day correlation between Bitcoin and gold stands at 0.56, a record since the start of the measurement in 2017.
• The correlation with the Nasdaq 100 is simultaneously falling to around 0.30, the lowest level in a year.
• The shift can largely be attributed to the so-called debasement trade in August, fuelled by the bond buyback programme of the US Department of the Treasury.

Previous record from 2020 now surpassed

A correlation of 1 means that two assets always move in the same direction. At 0 there is no relationship, and at -1 they move in exactly opposite directions. The current value of 0.56 exceeds the previous high of about 0.50 from November 2020.

Over a shorter period of 30 days, the correlation with gold is even higher, namely 0.72. On that same 30-day basis, the relationship with the Nasdaq Composite falls to just 0.22. This reinforces the thesis that Bitcoin is once again being seen as digital gold, as can also be seen in earlier reporting on the increasing co-movement of both assets.

Bond buyback programme gives debasement trade a boost

The sharp rise in the correlation is largely attributable to one specific moment in August. When the US Department of the Treasury, under Secretary Scott Bessent, began buying back long-term government bonds, gold and Bitcoin shot up. Investors interpreted this as a signal to flee into assets that offer protection against currency debasement.

Within 24 hours, gold rose by 4.6%, while Bitcoin jumped by 9.2%. Silver and platinum both gained 6%. The Nasdaq remained almost unchanged that day and closed within 0.6% of its opening price. In the period from 19 to 21 August, Bitcoin subsequently rose another 22.8%, well above the 6% that gold gained in those same three days.

”Not just a leveraged bet on tech”

The shift has implications for how investors deploy Bitcoin. Asset manager Bitwise argues that the case that Bitcoin is simply a leveraged play on technology no longer appears tenable. Bloomberg’s senior ETF analyst concludes, based on a six-month period, that Bitcoin moves less in tandem with US stocks than gold does, which refutes the view that Bitcoin is comparable to the Nasdaq 100.

Whether the correlation remains at this level depends largely on monetary policy in the US. As long as investors fear currency debasement, the link between Bitcoin and gold appears to remain intact for now. Bitcoin currently stands at $79.100, down 0.4% in the past 24 hours.