Gold Peaks, Bitcoin Slumps: The Moment the Correlation Breaks!

I start my words with this chart I created for you. It is not difficult to observe the correlation between bitcoin and gold.

Over the last 12 months, we have witnessed Bitcoin following Gold’s upward movement when the correlation was +0.25 or higher. This suggests that some investors may view Bitcoin as a store of value, just like gold. On the other hand, with the increasing risk of recession, gold has reached new historical highs, while Bitcoin has lost about 13% in the last month.

As of August 1, 2024, the correlation between gold and Bitcoin can be observed to have weakened, with the correlation coefficient hovering close to zero. This change shows that investors do not yet see Bitcoin as a strong store of value, while recession risks are on the table.

Is Bitcoin a store of value?

Investors’ perception of Bitcoin will be decisive in the coming days. If Bitcoin continues to be seen as a strong store of value, we may see a revival of the positive correlation between Bitcoin and gold.

However, if recession risks intensify and investors begin to see Bitcoin as a store of value, this correlation could be a leading indicator. Seeing the relationship between gold and Bitcoin break down could be a very serious test for Bitcoin, which has not yet encountered a recession.

The key will be how investors respond to economic uncertainty and whether they see Bitcoin as a reliable hedge alongside gold, a traditional store of value.

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