Bitcoin Correlation with Gold Plunges to Two-Year Low: Warning for Investors?

• Bitcoin’s correlation with gold continues to fall, indicating remains a long way off from achieving store-of-value status.
• Correlation between gold and Bitcoin is approaching a near-perfect negative one over the past thirty days.
• Bitcoin trades like a risk-on asset, as evidenced by its performance during periods of extreme volatility in the financial markets.

Bitcoin’s Correlation with Gold at Two Year Low

Bitcoin has been struggling to achieve a store-of-value status akin to digital gold since the FTX collapse in November. The correlation between gold and Bitcoin has been steadily decreasing ever since then, reaching its lowest level in two years. During the past thirty days, this correlation has approached nearly -1, indicating that Bitcoin behaves like a risk-on asset rather than a safe haven investment.

Correlation Near Perfect Negative One

The 30-day Pearson correlation metric between gold and Bitcoin is currently close to -1, showing that they have an opposite relationship with each other. This is the lowest value seen since the FTX collapse two years ago. Furthermore, looking at the 60 day rolling window shows that it is currently the lowest it has been in eighteen months, which was when Russia invaded Ukraine and caused extreme volatility across financial markets worldwide.

Bitcoin Trades Like Risk On Asset

The data suggests that while there may be some potential for Bitcoin to act as an uncorrelated asset in certain market environments, it still generally trades like a risk on asset rather than providing investors with safe haven protection during times of market stress or uncertainty. This could change over time if new use cases emerge for cryptocurrency investments but for now, Bitcoin remains firmly on the long end of the risk spectrum.

Impact Of Tight Monetary Policy

The full effects of tight monetary policy are yet to be felt so investors should not get too ahead of themselves and assume that cryptocurrencies will always behave differently from traditional assets such as stocks and commodities during periods of increased uncertainty or market turbulence. It will take further evidence for investors to become confident enough to really trust cryptocurrency investments as viable stores of value over more established options such as gold or government bonds.


Overall, this data highlights once again that while Bitcoin may have some potential to act as an uncorrelated asset over time due to its unique characteristics such as finite supply or decentralized network structure, it still trades like a risk on asset most of the time which means investors need to remain cautious when investing their money into cryptocurrency markets despite any potential upside opportunities they may present..