Summary
- Bitcoin’s 90-day correlation coefficient with gold rose to about 0.50, reaching its highest level since the Covid outbreak.
- Bitcoin’s 90-day correlation coefficient with the Nasdaq 100 Index fell to about 0.30, the lowest level in a year.
- After the U.S. Treasury announced an expansion of long-term Treasury buybacks, concerns over sovereign debt and currency debasement drew attention to scarce assets such as gold and Bitcoin.
Forecast Trend Report by Period
Bitcoin and gold are moving more closely together than at any time in about six years. At the same time, Bitcoin’s correlation with the tech-heavy Nasdaq 100 Index has dropped to its lowest level in a year. The shift suggests investors are increasingly treating Bitcoin as an alternative asset that can hedge against currency debasement rather than as a risk asset akin to technology stocks.
Analysis by The Kobeissi Letter of data from Bitwise Asset Management and Bloomberg showed on Sept. 5 that Bitcoin’s 90-day rolling correlation with gold rose to about 0.50. That marks the highest level since 2020, when the Covid outbreak began. It is also more than double the level at the start of the year.
A correlation coefficient measures the extent to which two assets move in the same direction. A reading closer to 1 indicates they tend to move together, while 0 means there is no clear relationship. The current figure does not mean Bitcoin and gold are moving in complete lockstep, but it does show a moderate positive correlation.
By contrast, Bitcoin’s 90-day correlation with the Nasdaq 100 fell to about 0.30, the lowest level in the past year. The positive relationship remains in place, but Bitcoin has begun tracking gold more closely than U.S. technology stocks.
The Kobeissi Letter wrote that the convergence between Bitcoin and gold accelerated after the U.S. Treasury announced an expansion of long-dated Treasury buybacks. On Aug. 19, the Treasury said it would more than double the per-operation cap for buybacks of Treasuries with maturities of 10 to 30 years, raising the limit from $2 billion to at least $4 billion. The expanded buybacks will be carried out from Sept. 9 through Nov. 4.
Treasury buybacks are a mechanism through which the Treasury repurchases long-dated government bonds circulating in the market to improve liquidity in the bond market. Markets took the move as a sign that the U.S. government was stepping in to stabilize conditions after long-term yields surged on wider fiscal deficits and increased Treasury supply. As concerns mounted over sovereign debt and currency debasement, attention turned at the same time to gold and Bitcoin, both of which have limited supply.
