Bitcoin’s 90-day correlation with gold hits nine-year high

BTC’s 90-day price correlation with gold has reached +0.56, its highest level since most data providers started measuring it in January 2017 and higher than its prior record of +0.5 in November 2020.

Meanwhile, the 90-day correlation of BTC with the Nasdaq 100 index slid to roughly +0.30 over the same window, a one-year low.

Pearson price correlations range from -1 to +1. Perfect correlation is +1, meaning the assets always affect one another’s price and never decouple in their correlated movements.

At 0 or “no” correlation, the assets never affect one another’s price. At -1, the assets move in perfectly opposite directions — one rising and one falling by proportionally consistent amounts.

Mathematicians choose a set length of time to determine how correlated their prices are; for example, over the last 90 days.

At a +0.56 correlation and rising, the narrative of “digital gold” is back for BTC and displacing its Nasdaq “tech play” narrative.

Noting the increased coupling, Bitwise Asset Management wrote, “The argument that BTC is ‘just a leveraged tech investment’ may not be true after all.”

Bloomberg’s senior ETF analyst similarly found that BTC correlated less with US stocks over six months than gold. The finding “blows up the claim,” he said, that BTC “is just QQQ.”

August’s debasement trade reunited gold and BTC

On a shorter, 30-day timeframe, gold’s correlation with BTC has risen to an even higher Pearson rating of +0.72. On that 30-day rolling period, its Nasdaq composite correlation sunk to 0.22.

The two assets snapped back into high correlation on one date for one reason.

After US Treasury Secretary Scott Bessent commenced Quantitative Easing (QE) Lite by buying back billions of dollars in long-dated bonds, the debasement trade surged. Traders rushed into gold, BTC, and other debasement proxies.

Within 24 hours, gold rallied 4.6%, BTC skyrocketed 9.2%, and silver and platinum both surged 6%. Nasdaq, meanwhile, barely budged that day, closing within 0.6% of its opening price.

In early August, Protos reported that gold had outrun BTC by more than 70% over the prior year. Its amplification continued in August, with BTC rallying 22.8% across August 19-21, far surpassing gold’s 6% rally over these three days of initial “QE Lite” exuberance for ostensible protection against fiat debasement.

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