Bitcoin-Gold Correlation Climbs to Highest in Nearly Six Years, Overtaking Nasdaq

Bitcoin's price correlation with gold has strengthened to its highest level in nearly six years. At the same time, its correlation with the tech-heavy Nasdaq 100 Index has fallen to the lowest level in a year. The shift suggests a growing view of Bitcoin as an alternative asset that can hedge against currency debasement, rather than a risk asset akin to technology stocks.

An analysis of Bitwise Asset Management and Bloomberg data by The Kobeissi Letter showed Bitcoin's 90-day rolling correlation with gold rose to about 0.50 on September 5. That marks the highest level since 2020, when the Covid-19 pandemic began. It is also more than double the level at the start of the year.

A correlation coefficient measures the extent to which two assets move in the same direction. A reading closer to 1 means prices move together, while 0 indicates no clear relationship. The current figure does not mean Bitcoin and gold are moving in perfect lockstep, but it does show a moderate positive correlation.

By contrast, Bitcoin's 90-day correlation with the Nasdaq 100 Index has fallen to about 0.30, the lowest level in the past year. The positive relationship remains, but Bitcoin has begun to follow gold price movements more closely than those of U.S. technology stocks.

The Kobeissi Letter said the tighter relationship between Bitcoin and gold accelerated after the U.S. Treasury announced an expansion of long-term Treasury buybacks. On August 19, the Treasury said it would more than double the per-operation cap for buybacks of Treasuries with maturities of 10 to 30 years, raising it to at least $4 billion from $2 billion. The expanded buybacks are scheduled to run from September 9 through November 4.

Treasury buybacks allow the Treasury to repurchase long-dated government bonds circulating in the market to improve liquidity in the bond market. Investors viewed the move as a step by the U.S. government to stabilize markets after long-term yields surged amid fiscal deficits and increased Treasury supply. With concerns growing over sovereign debt and currency debasement, gold and Bitcoin, both of which have limited supply, drew attention at the same time.