Bitcoin’s Correlation With Gold Breaks Down Entirely

Bitcoin’s Correlation With Gold Breaks Down Entirely
Andrew Rummer

over 2 years ago1 min

After spending most of the past year dancing hand in hand, the prices of bitcoin and gold are once again moving to the beat of different drums.

Despite often being referred to as “digital gold”, bitcoin’s price can be driven by very different factors to gold’s. While both are considered hedges against inflation in their own way, gold is often more susceptible to changes in the yield available on safe government bonds and bitcoin is more dependent on crypto-specific headlines around adoption and regulation. 

As the chart above shows, the 120-day correlation between bitcoin and gold has tumbled from about 0.5 in November to basically zero – returning to the long-term trend of a very weak relationship between the two prices. 

And the chart below sums up the two assets’ differing reactions to Friday’s US jobs data, which came in stronger than expected and showed the world’s biggest economy may be on the path to recovery. Since the report dropped at 8:30am New York time on Friday, gold (in pink) has slipped by nearly 4% while bitcoin (in blue) has climbed by more than 12%. 

Bitcoin and gold react to Friday's jobs report
Normalized with value of 100 at 8:30am on August 6th


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