Bitcoin Breaks Correlation with Gold and Silver, Reaches Cyclical Lows: Glassnode

4:00 pm
June 28, 2023
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Data from Glassnode reveals that the correlation between Bitcoin and commodities like Gold and Silver has recently dropped to cyclical lows.

Bitcoin’s Correlation with Gold & Silver Turns Negative

According to on-chain analytics firm Glassnode, the latest price action in Bitcoin has decoupled the cryptocurrency from traditional assets such as Gold and Silver. The correlation between Bitcoin and these commodities measures how closely their prices move together over a specific time period, usually 30 days.

Positive correlation values indicate that Bitcoin and the asset are moving in the same direction, while negative values suggest they are moving in opposite directions. A higher value indicates a stronger response from Bitcoin to the asset’s movements.

Recent data shows that the 30-day correlation between Bitcoin and Gold and Silver has plunged, reaching negative values. BTC’s correlation with Gold (XAU) is currently at -0.78, while its correlation with Silver (XAG) is even lower at -0.90, indicating a deep decoupling.

Bitcoin’s Recent Trend:

A chart provided by Glassnode shows that the correlation between Bitcoin and Gold/Silver had been high until recently, but with the cryptocurrency’s recent surge, the correlation values have plummeted.

Reason for the Negative Correlation:

The reason for Bitcoin’s highly negative correlation with these commodities is their recent decrease in price, while Bitcoin has experienced a sharp rally. This shift in correlation is notable because Bitcoin had been closely correlated with traditional assets since the beginning of the year, except for a temporary decoupling between late February and early March.

It remains to be seen whether this break in correlation is temporary or if Bitcoin will continue to move independently from these assets in the coming days.

BTC Price

Currently, Bitcoin is trading around $30,200, experiencing a 5% increase over the past week.

FAQ

What does correlation between assets mean?

Correlation measures how closely the prices of two assets move together over a specific time period. A positive correlation means they move in the same direction, while a negative correlation indicates they move in opposite directions.

What is the significance of Bitcoin’s correlation with Gold and Silver?

The correlation between Bitcoin and Gold/Silver provides insights into how the cryptocurrency behaves in relation to traditional assets. When the correlation is high, Bitcoin tends to move in tandem with these assets, while a low or negative correlation suggests Bitcoin is decoupling from them.

Why has Bitcoin’s correlation with Gold and Silver dropped to cyclical lows?

Bitcoin’s recent surge in price while Gold and Silver prices have been decreasing has led to a break in correlation. This decoupling indicates that Bitcoin is currently moving independently from these commodities.


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