According to CryptoQuant CEO Ki Young Ju, the correlation between Bitcoin and gold is rising as both assets strengthen their reputation as hedges against macroeconomic uncertainty.
In a post on X released on Tuesday, Ju noted that as gold surged to new historical highs, the correlation between BTC and gold sharply increased. "Gold continues to set new highs. The correlation between BTC and gold is very high; the digital gold narrative still exists. The demand for inflation hedging has not disappeared," he wrote.
According to CryptoQuant data, the correlation between BTC and gold currently exceeds 0.85, compared to -0.8 in October 2021. This correlation previously reached a historical high (ATH) of about 0.9 last April.
Andrei Grachev, managing partner at DWF Labs, stated that this correlation also reflects how institutional investors view Bitcoin (BTC). "Capital naturally rotates into assets that are seen as stable stores of value," he said.
Grachev compared Bitcoin's trajectory to the history of gold itself, which transitioned from an active currency to a store of wealth. "It was once actively used as currency and then primarily became a store of value. Bitcoin seems to be following a similar trajectory, which explains why its price movements increasingly echo the dynamics of gold," he said.
Ben Elvidge, head of business applications at Trilitech and product lead at Uranium.io, stated that due to its programmed scarcity, Bitcoin currently has more utility as a store of value than as a means of transfer. "This is because its capital appreciation potential has surpassed the convenience of making payment transfers," he said.
On Tuesday, gold prices soared to a historical high of $4,179.48 per ounce. Spot gold rose 0.5% to $4,128.49, while December delivery U.S. gold futures climbed to $4,158. The metal has risen 57% this year, driven by geopolitical risks.
Silver also hit a historical high of $53.60 before retreating to $52.27, with its annual increase expanding to over 85%, outpacing gold's gains.
The surge in gold and silver comes as financial institutions increasingly embrace "devaluation trades," investing in assets that hedge against the loss of purchasing power due to ongoing money printing.
Last week, entrepreneur Anthony Pompliano stated that institutions now recognize "no one is going to stop printing money," driving demand for hard assets.
Related: Tom Lee and Arthur Hayes insist that Ethereum (ETH) will reach $10,000 this year.
Original article: “Bitcoin (BTC) Correlation with Gold Soars to 0.85, Transitioning from Currency to Store of Value”
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