Recent data indicates that Bitcoin has become increasingly correlated with Gold, suggesting that the digital gold narrative is making a comeback. The correlation between Bitcoin and Gold, a metric tracking how closely the prices of the two assets move in relation to each other, has risen to 0.75 recently, according to a new post on the market intelligence platform IntoTheBlock.
When this correlation metric is positive, Bitcoin reacts to movements in the Gold price by moving in the same direction. The closer the value is to 1, the stronger this relationship is. Conversely, a negative value would indicate that the two assets move in opposite directions. A value of zero would mean there is no relationship between the asset prices at all, demonstrating statistical independence.
The trend since the beginning of 2024 shows a clear upward trajectory in Bitcoin’s correlation with Gold. The metric had reached its lowest point in July but has been steadily rising since then. Now sitting at 0.75, this is the highest it has been since March, indicating a notable positive relationship between Bitcoin and Gold. According to IntoTheBlock, this increase likely reflects investors’ recession fears and diminishing confidence in the dollar, pushing them towards safer assets. This trend underscores Bitcoin’s evolving role as a hedge in macroeconomic conditions.
This correlation can be a valuable indicator for investors seeking diversification. Generally, highly correlated assets may not be ideal to hold together, such as Bitcoin and Gold at present. However, it’s worth noting that Ethereum’s correlation with Gold remains minimal, suggesting a different market role. According to IntoTheBlock, Ethereum is seen more as a speculative, growth-oriented asset, with its price driven by factors within its ecosystem like DeFi activity and staking, rather than external economic conditions.
On the price front, Bitcoin has shown little movement recently and continues to trade around $63,500, maintaining a sideways trajectory over the past few days.
