Bitcoin’s Link to Gold Hits a 6-Year High as Tech Correlation Fades: Why It Matters

Bitcoin has frequently been criticized for behaving more like a leveraged tech stock rather than 'digital gold,' but this hasn't been the case lately. The correlation between the leading cryptocurrency and the largest financial asset, gold, has climbed to its highest level since the 2020 pandemic, while its relationship with the Nasdaq has weakened significantly. The shift comes as concerns about debt, deficits, and currency debasement return to the spotlight after the latest developments in the US. Closer to Gold The change started to occur following the mid-August rally, which was propelled by the US Treasury Department’s announcement that it would at least double the maximum size of liquidity-support buybacks for longer-dated government debt, going from $2 billion to $4 billion per operation. BTC rocketed from under $65,000 to over $80,000 within days, while the bullion went from $4,350/oz to $4,700/oz before it was rejected. The analysts at the Kobeissi Letter argued that BTC’s increasing correlation with the precious metal accelerated following the Treasury’s move, with investors increasingly treating both as protection against currency debasement, even though gold has lost a ...