Bitcoin and Gold Correlation Reaches 0.56, Highest Since 2020

The correlation coefficient between Bitcoin (BTC) and gold has reached 0.56 over the past 90 days, marking the highest level since 2020. The correlation between the Nasdaq 100 and the US dollar has approached zero. According to a CoinMetrics report, Bitcoin is evolving into a scarce asset similar to gold, moving away from being a risk asset that moves in tandem with tech stocks. The correlation coefficient indicates the degree to which the price movements of the two assets move in the same direction, with a value closer to 1 indicating stronger synchronization. This change suggests a shift in market interests affecting Bitcoin prices. Factors such as currency depreciation, concerns over national debt, and expectations of real interest rates have been identified as common influences on both Bitcoin and gold. The increasing synchronization between Bitcoin and gold is attributed to the interaction of dollar and gold flows, as well as ETF capital movements. There have been past instances of heightened correlation between Bitcoin and gold, and in 2023, this correlation rose again due to the bankruptcy of regional banks in the US and instability in the financial system. The US Treasury is increasing the scale of long-term Treasury bond repurchases to heighten market interest in long-term interest rates and the value of the dollar. CoinMetrics has warned that Bitcoin could face pressure if interest rates continue to rise. The US Bureau of Labor Statistics announced that non-farm employment increased by 162,000 in August, and Bitcoin fell by 2.32% following the employment report. The next key event is the release of the US August CPI, which could increase pressure for interest rate hikes if it exceeds market expectations.

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