Bitcoin Price Is Decoupling From Gold Again — What’s Happening?

Bitcoin has often been referred to as the “digital gold,” as it has proven to be a unique asset class and, more importantly, a reliable store of value over the years. While gold surely outpaces BTC in age, both assets are commonly used by investors as a hedge against economic instability and inflation.

Interestingly, there is almost always a positive correlation between Bitcoin and gold, leading to limited diversification opportunities for investors. However, the latest data shows that the premier cryptocurrency and the precious metal have been decoupling from each other in recent weeks.

BTC Is Losing Correlation With Gold — What Next?

In a recent Quicktake post on the CryptoQuant platform, an analyst with the pseudonym Darkforst talked about the existing relationship between the price of Bitcoin and gold. According to the pundit, there is an ongoing decoupling between the crypto market leader and the gold market.

For context, correlation is a metric that measures the degree of association (how closely related) of the direction of prices of two specific assets. When the value of correlation is positive, it implies that the two assets are moving in the same direction. It is worth mentioning that the closer the metric’s value is to 1, the more correlated the assets are.

On the flip side, a correlation value less than 0 indicates that the two assets are negatively correlated, meaning that they are moving in opposite directions. Similarly, the closer the correlation value is to -1, the less closely related the assets.

While the gold market has been performing well in recent months, the metal’s price has slumped over the past few weeks. On the other hand, the Bitcoin price has enjoyed a strong bullish momentum in November, forging successive all-time highs in recent weeks.