Bitcoin’s relationship with traditional markets has changed sharply in a matter of weeks, with Santiment data showing that its correlations with stocks, the greenback, and even gold have all weakened.
The part with gold is particularly interesting, as both assets recently moved at the same pace, but BTC now appears to be trading far more independently of all major comparison alternatives.
BTC Breaks Away
Santiment’s analysis highlighted the breakdown in bitcoin’s correlations with major assets, including the precious metal and US equities, indicating that the cryptocurrency is no longer moving closely alongside any of them. This major change materialized over the past several days, after BTC rebounded from the dip to $75,000 following the failure of the CLARITY Act vote and surged to a multi-month peak of over $87,000.
The shift is quite striking because the opposite narrative, especially when compared to gold, dominated only a few weeks ago. As reported in early September, BTC’s 90-day correlation with the precious metal had climbed above 0.50 for the first time in approximately six years. The relationship with the Nasdaq 100, though, had dropped toward the 0.30-0.33 range, prompting suggestions that investors were treating bitcoin less like a high-beta tech asset and more like a scarce monetary hedger.
That interpretation made a lot of sense at the time since BTC and gold both benefited and rallied from renewed concerns over government debt, deficits, and currency debasement, while equities struggled to keep pace. However, that relationship has proved far less durable than it initially appeared, as gold has remained at essentially the same levels, while bitcoin has posted major gains.
Independent Trade?
The reversal speed is arguably more significant than the absolute correlation numbers, as BTC’s strengthening relationship with gold was one of the market’s more notable macro developments just three weeks ago. The data from this week, though, complicates that narrative, as bitcoin has continued advancing even as the precious metal has pulled back from recent highs. At the same time, US stocks have followed their separate trajectory.
The cryptocurrency also absorbed both major negative developments from last week – the Fed’s hike and the CLARITY Act setback, before it rose above $87,000.
None of this means that BTC has permanently decoupled from macro markets. Its historical correlations have repeatedly shifted depending on liquidity, monetary policy, and investor positioning, but the data now shows that it doesn’t move like digital gold, a leveraged tech stock, or an anti-dollar trade; BTC moves on its own.
Source: CryptoPotato
