A report from CryptoQuant suggests Bitcoin has lost its correlation to gold in recent months as investors flock to the safe-haven asset over its digitized brother, Bitcoin, which has experienced much more volatility since its inception.
Gold is reaching new highs above $2,500 an ounce while Bitcoin is down about 23% from its all-time high of more than $70,000 earlier this year.
Weakening demand for Bitcoin
“Bitcoin has decoupled from gold,” the report states. “Bitcoin prices have declined at the same time gold prices have reached a fresh record high, causing correlation between them to turn negative.”
The analysts showed that Bitcoin’s market-value-to-realized-value ratio has been below its 365-day moving average since Aug. 26, suggesting the negative correlation may continue as Bitcoin prices continue to lag to gold.
“A cross below the 365-day moving average also signals risks of a further price correction,” the report states. “This condition was also present in May 2021, when Bitcoin declined 3% in the span of two months, and in November 2021, the start of the last bear market.”