(Kitco News) - Gold has managed to push back above $4,100 an ounce, but the precious metal continues to face significant headwinds from persistent inflation fears, which are driving hawkish monetary policies around the world. However, gold is not the only alternative asset attracting attention as investors look to protect their wealth against currency debasement and broader financial market risks.
According to one market analyst, Bitcoin is increasingly behaving like gold, suggesting that investors could be starting to view the digital currency as a supplementary safe-haven asset rather than simply another speculative risk asset.
In a note published Thursday, Thahbib Rahman, Research Analyst at Block Scholes, said that Bitcoin's correlation with gold is at its highest level since November 2020, when pandemic-era fiscal and monetary stimulus gripped financial markets.
He added that the digital currency’s performance since late summer has revived the debate over whether it is living up to its digital-gold narrative of the last few years.
“The move higher in the 90-day rolling correlation began in June and accelerated in August after the US Treasury stepped up its bond buyback programme in an attempt to cap longer-dated Treasury yields,” Rahman said. “In the week following that announcement, BTC posted its largest weekly gain since March 2024, rallying more than 20%, while gold moved 5% higher too. The correlation went on to peak at 55% in mid-September, the highest in our data going back to 2014, and sits at 51% today.”
Both Bitcoin and gold have attracted attention as alternative assets amid renewed interest in the debasement trade. Investors are increasingly looking for ways to preserve their wealth as global sovereign debt rises at an unsustainable pace and persistent inflation erodes the purchasing power of fiat currencies.
Rahman's analysis suggests that Bitcoin's strengthening relationship with gold could reflect a shift in how investors view the digital currency, particularly as concerns about government debt, inflation and monetary policy continue to influence financial markets.
He also noted that renewed interest in Bitcoin comes as investors look to diversify away from record-high equity market valuations. Although Bitcoin continues to trade with a positive correlation to major equity indexes, that relationship has weakened significantly this year.
“The 90-day correlation with the S&P 500 and the Nasdaq-100 is still positive at around 40%, but has fallen from a 62% high in February, and since mid-August, BTC has been more closely correlated with gold than with US stocks for the first time since late 2020,” he said. “This could be an early sign that markets are beginning to treat BTC as a supplementary hedge alongside gold in the current macro-driven environment.”
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