Bitcoin-Gold Correlation Hits Zero as Both Assets Rally in Global Markets

Bitcoin-Gold Correlation Hits Zero as Both Assets Rally in Global Markets

As global markets surge, with Total World Indices up 28% over the past 12 months, both Bitcoin and gold have seen significant gains. Despite both assets nearing their all-time highs, data shows that Bitcoin and gold are less correlated than ever before.

While gold has reached a new all-time high, Bitcoin remains 6% below its record peak. More notably, the correlation between the two assets has steadily decreased. Four years ago, the correlation between Bitcoin and gold stood at over 50%. Today, that figure has dropped to nearly zero, indicating that the price movements of the two assets have become increasingly independent.

The Decline in Bitcoin-Gold Correlation

Back in October 2020, Bitcoin's average daily returns over rolling 90-day periods exhibited a 50% positive correlation to gold’s returns. This meant that Bitcoin and gold often moved in the same direction. However, recent data reveals that Bitcoin’s 90-day correlation to gold is now just 0.04, signaling almost no relationship between the price movements of the two assets.

Correlations range from 1, where two assets always move together, to -1, where they always move in opposite directions. A correlation close to zero means there is little to no relationship between the assets’ price movements. Bitcoin’s current 0.04 correlation with gold indicates that over a rolling three-month period, the performance of gold has virtually no impact on Bitcoin’s returns.

Bitcoin No Longer Trading Like ‘Digital Gold’

Bitcoin has often been referred to as “digital gold,” but its trading behavior over the past 90 days tells a different story. Despite being labeled as a store of value similar to gold, Bitcoin’s recent market behavior shows that it is moving on its own trajectory, independent of the traditional safe-haven asset.

This shift highlights the evolving nature of Bitcoin, as it continues to distinguish itself from gold in the broader financial markets. As both assets continue to rally in the current bull market, traders should be aware that Bitcoin and gold are no longer following the same patterns, making their respective price movements increasingly unpredictable.