BTC's 90-day gold correlation reaches highest since 2017

Bitcoin's 90-day price correlation with gold climbed to +0.56, the highest reading since measurement began in January 2017, surpassing the previous peak of +0.5 set in November 2020.

Over the same period, the 90-day correlation between bitcoin and the Nasdaq 100 fell to about +0.30, marking its lowest point in a year.

Pearson correlation coefficients span from -1 to +1. A reading of +1 indicates perfect correlation, where the assets' prices always move together and never diverge in their linked movements.

A correlation of zero means the assets' prices have no relationship. At -1, they move in exact opposition, with one increasing and the other decreasing by the same proportional amount.

The correlation is calculated over a chosen time window, such as the past 90 days.

With the correlation at +0.56 and still increasing, the 'digital gold' narrative for bitcoin is re-emerging, overtaking the notion of it as a tech stock tied to the Nasdaq.

Bitwise Asset Management observed the stronger link and stated, “The argument that BTC is ‘just a leveraged tech investment’ may not be true after all.”

Bloomberg's senior ETF analyst also noted that bitcoin's six-month correlation with US stocks was lower than that of gold. This result, he said, 'blows up the claim' that bitcoin 'is just QQQ.'

Debasement trade in August brought gold and bitcoin back together

Looking at a 30-day window, gold's correlation with bitcoin rose to an even stronger +0.72. Over that same rolling period, bitcoin's correlation with the Nasdaq composite fell to 0.22.

The two assets returned to a high correlation on a single date for a specific reason.

Following US Treasury Secretary Scott Bessent's launch of Quantitative Easing (QE) Lite, which involved buying back billions in long-term bonds, the debasement trade gained momentum. Investors flocked to gold, bitcoin, and other assets that act as hedges against currency debasement.

In the 24 hours after that, gold jumped 4.6%, bitcoin soared 9.2%, and silver and platinum each rose 6%. The Nasdaq, however, moved little that day, ending within 0.6% of its open.

Earlier in August, Protos noted that gold had outperformed bitcoin by over 70% in the preceding year. That trend extended in August, as bitcoin surged 22.8% from August 19 to 21, well above gold's 6% gain over those three days of early QE Lite enthusiasm, as investors sought protection from fiat debasement.