Bitwise reports that Bitcoin is increasingly exhibiting trading patterns akin to gold instead of functioning merely as a tech asset, bolstering its long-held identity as “digital gold.”
- Bitwise noted that Bitcoin’s 90-day correlation with gold has surged to its peak since 2020, alongside a 22.4% growth in BTC over a week and a 5% increase in gold.
- The connection with technology stocks appears to have weakened, with the 90-day correlation with the Nasdaq-100 decreasing to approximately 0.33, marking a one-year low.
- Conversely, the US Dollar Index showed an inverse trend, as the Treasury approaches plans to ramp up its long-term bond buybacks.
Bitcoin (BTC) is showing a notable transformation in its trading behavior, aligning itself more with gold as a hedge against market instability, gradually distancing itself from its past image as a high-risk investment. New insights from Bitwise indicate that Bitcoin’s 90-day correlation with gold has ascended to a level not seen since 2020, while its correlation with the Nasdaq-100 has dipped to a recent low.
In a memo from André Dragosch, Bitwise’s Director and Head of Research, he explained that this shift occurred during a tumultuous period in the global financial landscape. The report noted Bitcoin’s performance has surged by 22.4% this past week, marking its strongest weekly growth since March 2024, while gold managed a modest rise of about 5% during the same timeframe, as stocks continued to falter.
Bitcoin Exhibits Gold-like Trading Patterns
Simultaneously, Bitcoin’s correlation with the Nasdaq-100 tumbled to a one-year low, dropping to around 0.33 by late August. Dragosch underscored the significance of this drop, as Bitcoin has typically been linked closely with high-risk tech assets. Bitwise pointed out that the recent findings indicate a weakening of that relationship. Additionally, Bitcoin’s correlation with the U.S. Dollar Index registered at -0.35 late last month.
This negative correlation suggests that Bitcoin and the dollar have been moving in opposing directions over this period. However, Bitwise also clarified that Bitcoin and gold are not identical assets; gold has a much longer legacy as a value storage vehicle, while Bitcoin is relatively new and known for its volatility.
Over the past three months, Bitcoin has outperformed gold, achieving a 30.59% rise compared to gold’s 2.62%. While both assets recorded growth in August, Bitcoin’s aggressive fluctuations illustrate its heightened volatility. The data reflects that Bitcoin is partaking in the same broader “debasement trade” as gold but continues to operate more like a high-risk asset.
Bitcoin’s current trading price is $79,978, showing a decline of less than 3% in the past 24 hours. On Stocktwits, the retail sentiment regarding BTC remains neutral, coupled with typical chatter levels observed recently.
XAUUSD’s current trading price is $4,429 at the time of writing. On Stocktwits, the retail sentiment surrounding XAUUSD is in the bearish territory, with a high volume of discussions noted over the past day.
Treasury Buyback Initiatives Highlight Liquidity Concerns
This analysis arrives as the U.S. Treasury plans to enhance its long-term bond buybacks. The Treasury announced it would increase the size of buybacks for 10- to 20-year and 20- to 30-year Treasury securities from $2 billion to at least $4 billion for each operation, beginning September 9.
The goal, as stated by the department, is to inject more liquidity into longer-term Treasury markets. Bitwise contended that stronger government interventions and fears regarding the stability of traditional currencies could drive investors toward Bitcoin, alongside gold.
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