Bitcoin and Gold Reach All-Time High Correlation Coefficient

The 90-day Pearson correlation coefficient between Bitcoin (BTC) and gold prices has reached an all-time high. The 30-day correlation coefficient has also risen to a yearly peak of 0.8. According to data from The Block, the degree to which the prices of the two assets move in the same direction has increased. A Pearson correlation coefficient close to 1 indicates a strong relationship, but a higher correlation does not predict future price directions. This synchronization occurred amid concerns over the declining value of the dollar and government-backed assets. Bitcoin and gold are analyzed as scarce assets that are likely to attract demand for asset allocation. Fund flows have also increased, with approximately $1 billion flowing into Bitcoin ETFs. The cumulative inflow for this year has been recorded at $1.89 billion. There have been past instances where the correlation coefficient between BTC and gold sharply increased, which was related to price rises. Currently, the Crypto Fear & Greed Index, a market sentiment indicator, stands at 68, indicating a state of 'greed'. The expanding correlation between Bitcoin and gold is also gaining attention in the Korean market.

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