Bitcoin's correlation with gold has reached its highest level in six years as investors increasingly turn to both assets as hedges against currency debasement, according to a report from Bitwise released this week.
The precious metal and leading cryptocurrency are trading in lockstep following U.S. government intervention in macroeconomic policy. Bitcoin surged last month after the U.S. Treasury Department announced it would more than double the size of its government debt repurchases, marking the coin's best performance in three years and its third-best August on record.
André Dragosch, Bitwise's European Head of Research, noted that the last time bitcoin-gold correlation was this elevated was in 2020 following fiscal and monetary stimulus during the COVID-19 crisis. He observed that bitcoin's correlation with the stock market has simultaneously dropped to a one-year low, suggesting a decoupling between hard assets and equities.
Bitcoin has been marketed as "digital gold" for years but historically traded with tech stocks as a risk-on asset. The current environment reflects a renewed focus on the debasement trade—purchasing assets to hedge against currency depreciation.
Dragosch attributed the trend to Treasury market interventions aimed at controlling long-term borrowing costs, which weakened the dollar and drew investors back to both gold and bitcoin. The situation intensified when the Treasury announced that U.S. public debt exceeded $40 trillion for the first time, further eroding confidence in the currency.
"Investors are no longer asking whether to hedge currency debasement with gold or bitcoin. They're simply hedging with both," the Bitwise report stated.
The report suggested that if the correlation trend persists, bitcoin's role as a hard asset may fundamentally shift. "Bitcoin spent its first fifteen years being priced as a risk asset. If this correlation trend with gold holds, the next fifteen may look very different."
Bitcoin rallied again this week, recently trading near $81,438 following a nearly 6% jump over a 24-hour period.
