History Repeating? Bitcoin Returns to the Digital Gold Era

The correlation with gold has reached a new high since 2020, but how is this script different this time?

Written by: Tanay Ved

Compiled by: Saoirse, Foresight News

Introduction

For a long time, the core investment logic of Bitcoin has been as a scarce, non-sovereign currency asset, often compared to gold. However, in certain market phases, its movements resemble high beta assets, influenced by market liquidity, interest rates, and risk appetite, similar to tech stocks. As the macro environment and the structure of Bitcoin investors evolve across different market cycles, the interrelationship between these assets also changes.

In this article, we will explore how the correlation between Bitcoin and gold, stocks, and the US dollar shifts with market cycles; why the current high correlation between Bitcoin and gold is noteworthy; and how changes in real interest rates and recent macro data releases have affected Bitcoin's recent performance.

Historical Correlation Cycles of Bitcoin

As discussed in our article "Is Bitcoin Decoupling from Traditional Markets?", the correlation between Bitcoin and traditional assets changes with market cycles. At different times, Bitcoin may move in sync with growth stocks and tech stocks or behave like a scarce store of value. What is particularly notable about the current market is that the 90-day correlation coefficient between Bitcoin and gold has risen to +0.56, the highest level since 2020; meanwhile, its correlation with the Nasdaq 100 and the US dollar has dropped to near zero.

Data Source: Talos CM Market Data

This divergence indicates that Bitcoin's price movements are no longer primarily driven by the risk beta of tech stocks but are more aligned with the macro factors supporting gold. Recently, Bitcoin and gold have been influenced by the same market environment, including concerns about currency devaluation, sovereign debt, and the outlook for real yields.

Looking back at historical phases of high correlation between Bitcoin and gold helps us understand the current market:

• 2020: At the onset of the COVID liquidity shock, Bitcoin and other risk assets fell in tandem; subsequently, the Federal Reserve's emergency easing and fiscal intervention suppressed yields, driving a significant rebound in Bitcoin and gold.
• 2023: Several regional banks in the US collapsed, prompting the Federal Reserve to introduce emergency liquidity tools, reigniting market concerns about financial system pressure and leading to expectations of interest rate cuts, benefiting both Bitcoin and gold.
• The current environment combines characteristics of the two previous periods: issues in the US Treasury market have refocused attention on the long-term purchasing power of the dollar, favoring scarce assets. However, unlike in 2020, real yields remain high, limiting the Federal Reserve's room to cut rates. The rising correlation between Bitcoin and gold reflects this environment; if rates continue to rise, Bitcoin will still face pressure.

What Makes This Market Cycle Unique?

The rising correlation between Bitcoin and gold is driven by two opposing macro forces. The US Treasury is taking action to support the long-end bond market, while the market continues to focus on government debt and the dollar's outlook; at the same time, the Federal Reserve is still combating inflation, with interest rates and real yields being the core variables determining Bitcoin's short-term movements.

• US Treasury Buybacks: After the US Treasury announced an increase in the scale of long-term bond buybacks to maintain market liquidity, Bitcoin and gold saw a rise. This move suppressed long-end yields and weighed on the dollar, refocusing the market on fiscal deficits, bond issuance scales, and the long-term purchasing power of the dollar. Although bond buybacks are not direct stimulus, they reignited the "currency devaluation trade," benefiting scarce assets like gold and Bitcoin.
• Federal Reserve's Fight Against Inflation: The Federal Reserve faces a contrasting dilemma. Strong employment data and ongoing inflation concerns may keep interest rates elevated for a longer period, pushing up real yields; meanwhile, the appeal of non-interest-bearing assets like Bitcoin may decline. The drop in Bitcoin following the release of the non-farm payroll data on September 4 illustrates how unexpectedly strong employment data can quickly elevate rate hike expectations, suppressing Bitcoin prices.

Data Source: Talos CM Market Data, Kalshi

After the Jackson Hole meeting, the market's implied probability of a 25 basis point rate hike at the September FOMC rose from 29% to 51% within four hours, during which Bitcoin fell by 1.8%, clearly reflecting Bitcoin's sensitivity to changes in Federal Reserve policy expectations. Similarly, Bitcoin experienced selling pressure after the initial release of the August non-farm payroll data, and only after the rate hike expectations were settled did the market digest this shock.

Bitcoin's Response to Recent Macro Data

Inflation and economic growth-related data can alter market pricing of Federal Reserve policy. Non-farm payroll reports, Consumer Price Index (CPI), and Federal Open Market Committee (FOMC) interest rate decisions will prompt the market to reassess the probabilities of further tightening or easing.

The following chart summarizes the average absolute price volatility of Bitcoin before and after macro events from January 2025 to September 2026, compared to regular periods without significant events, measuring only the magnitude of volatility without distinguishing between upward or downward movements.

Data Source: Talos CM Market Data

The immediate market reaction to employment reports is the strongest, with Bitcoin's volatility in the first 30 minutes after data release being twice that of regular periods. The core CPI data shows volatility 1.8 times the regular level during the same time frame, with effects lasting longer. In contrast, the volatility caused by the FOMC decision is close to baseline levels.

Data Source: Talos CM Market Data

The non-farm data released on September 4 clearly demonstrates the current market's heightened sensitivity to employment data. August saw an increase of 162,000 jobs, far exceeding the market expectation of 56,000, and Bitcoin fell by 2.32% within 30 minutes of the data release, with volatility reaching about six times the usual reaction to non-farm events.

Macro data determines the initial direction of the market, while perpetual futures positions, funding rates, open interest, and liquidations can amplify volatility and affect the duration of market movements. Within 30 minutes after the data release on September 4, Bitcoin's open interest fell by 3%; the scale of long liquidations and short liquidations was approximately 5:1, at $119 million and $24 million, respectively.

The CPI set to be released on September 11 is the most important leading data before the September FOMC meeting. The current rate hike expectations are in a delicate balance: if CPI exceeds expectations, it will intensify rate hike pressure; if CPI weakens, it could alleviate pressure, benefiting Bitcoin and gold, and boosting overall risk appetite.

Conclusion

Bitcoin remains a key barometer of risk appetite in the crypto market. If the Federal Reserve shifts to a more tightening policy path, it will likely suppress Bitcoin, altcoins, and leveraged positions; conversely, a decline in inflation and favorable interest rate policies could rejuvenate risk appetite across the market.

However, Bitcoin does not equal the entire digital asset industry. On-chain transactions, tokenization, settlement, and prediction markets are creating independent sources of trading volume, fees, and liquidity, with their own growth drivers. The continuous expansion of Hyperliquid's perpetual contracts for stocks and commodities, progress in the HIP-4 prediction market, and the ongoing growth in tokenized asset issuance all indicate that the ecosystem's development is independent of Bitcoin's price movements.

A loose interest rate environment can enhance market liquidity and risk appetite. Yet, even under macro pressure, the demand for stablecoins, on-chain yields, tokenized assets, settlement services, and around-the-clock trading infrastructure can continue to grow. Bitcoin may dictate short-term market sentiment, but the digital asset industry possesses the potential for sustained development across different macro cycles.