But in reality, gold and bitcoin are less correlated than ever. Unlike gold, which is at all-time highs, bitcoin is actually 6% less than its own historic peak.
Additionally, the standard correlation value between bitcoin and gold has fallen from over 50% four years ago to almost 0 today. Indeed, if traders look at a 90-day smoothed price chart of bitcoin and gold, they will find fewer similarities than ever.
Specifically, as of October 2020, Bitcoin’s average daily returns over 90-day rolling periods had a 50% positive correlation with gold’s 90-day rolling returns. But today, bitcoin trades completely independently of gold.
Bitcoin’s 90-day correlation with gold is currently just 0.04.
Correlations can range from 1 – a perfect correlation where two assets always trade together – to -1, which is a perfectly negative correlation where two assets always trade in opposite directions.
Bitcoin’s 0.04 correlation with gold means that gold’s average returns have almost no impact on Bitcoin’s average returns over a rolling three-month period. If bitcoin is digital gold, as has been claimed, it certainly hasn’t seen this much activity in the last 90 days.
