For years, Bitcoin advocates have called it digital gold. The problem? Bitcoin often didn't trade like gold. It behaved more like a highly leveraged tech stock, ripping higher when investors embraced risk and getting crushed when they didn't.
That may be changing. Bitcoin's 90-day correlation with gold has climbed to roughly +0.50, its highest level since 2020 and more than double where it began the year. At the same time, Bitcoin's correlation with the Nasdaq-100 has fallen to around 0.33, a one-year low.
That's an interesting shift. During the recent bond-market turmoil, Bitcoin surged 22.4% in one week, its biggest weekly gain since March 2024. Gold gained about 5%, stocks fell, and the dollar moved in the opposite direction.
In other words, investors weren't necessarily treating Bitcoin as another speculative tech trade. They were buying Bitcoin and gold together as alternatives to dollars and government debt. That matters because the U.S. just crossed $40 trillion in federal debt, while concerns about deficits, currency debasement and long-term Treasury yields continue growing.
Gold has been the traditional escape valve from that problem. Bitcoin was supposed to become the digital version. Maybe we're finally watching that thesis play out in real time.
There is an important caveat: correlations change, and previous periods when Bitcoin separated from stocks haven't always lasted. But if Bitcoin increasingly trades with gold during periods of monetary stress while becoming less correlated with equities, that's potentially a much bigger development than another Bitcoin rally.
Bitcoin doesn't need to replace gold, it just needs investors to increasingly ask...Gold or Bitcoin?
None of this "digital gold" narrative means anything if you don't hold your own keys. Gold's whole appeal as a debasement hedge is that it can't be frozen, seized, or rehypothecated by a third party without physical access. Bitcoin only matches that if it's in self-custody.
That precludes "starting to look like"
Bitcoin is most compelling if 2 narratives are simultaneously true, gold and tech.
If Bitcoin traded just like gold, there's no alpha. Gold's history and depth as a reserve currency wins, there's no reason to buy Bitcoin then. The lack of tech-like upside would imply it offers no utility beyond gold.
If Bitcoin traded just like a tech stock, there's asymmetry, but then it becomes a trading instrument with no floor and therefore not a viable long term hold.
The ideal is gold correlation is the floor, which appeals to fear, while tech asymmetry alpha appeals to greed.
You need both since all human action is based on either fear or greed.
The properties of both result in what quants call its sharpe ratio, which is what nothing else can compete on.