(Kitco News) – Both Bitcoin (BTC) and gold have seen tremendous growth in 2024, with the pair emerging as the best performing assets of the year, but over the past few months, gold has shined bright while BTC lagged, suggesting that investors see the yellow metal as the preferred safe-haven asset amid rising economic turmoil.
According to a report from CryptoQuant, the correlation between Bitcoin and gold has turned decidedly negative as of late as gold hit a new record high above $2,500 per ounce while BTC is down more than 22% from its high above $73,000 set in March.
At the same time as gold has gained favor with investors, U.S. stocks have struggled, with the S&P 500 slipping 3.6% since August 30.
“Regarding valuation metrics, the price of Bitcoin remains in a BEARISH phase,” analysts at CryptoQuant wrote. “CryptoQuant’s Bull-Bear Market Cycle Indicator has been in BEAR phase since August 27, when the price of Bitcoin was trading at $62K. As long as the indicator remains in BEAR phase a significant rally is not expected.”
The analysts noted that the MVRV (market-value-to-realized-value) ratio – an indicator that helps identify periods where Bitcoin is extremely over or undervalued relative to its ‘fair value’ – has “been below its 365-day moving average since August 26.”
“A cross below the 365-day moving average also signals risks of a further price correction,” they warned. “This condition was also present in May 2021, when Bitcoin declined 36% in the span of two months, and in November 2021, the start of the last bear market.”
They added that “Bearish signs are also evident in Bitcoin Long-term holders (LTH) spending at lower profit margins. The LTH SOPR ribbons (moving averages of different lengths) have been trending downwards since late July. The fact that LTHs are spending at lower profit margins is evidence of a lack of fresh demand for Bitcoin.”
BTC/USD Chart by TradingView
As a result of the weakening demand, “Bitcoin has decoupled from gold,” the analysts said. “Bitcoin prices have declined at the same time gold prices have reached a fresh record high, causing correlation between them to turn negative.”
XAUBTC Chart by TradingView
“A period of negative correlation between Bitcoin and gold, with gold increasing and Bitcoin decreasing, typically signals a risk-averse environment where investors favor traditional safe-haven assets like gold,” they concluded. “In turn, Bitcoin has followed the stock market to the downside.”
Bitcoin’s behavior as a risk asset similar to stocks was also highlighted by Julio Moreno, who said that “#Bitcoin is behaving more like the Nasdaq than as gold.”
#Bitcoin is behaving more like the Nasdaq than as gold.
30-day correlation:
Bitcoin-Nasdaq +0.39
Bitcoin-Gold -0.40 pic.twitter.com/4elvZwSrJx— Julio Moreno (@jjcmoreno) September 10, 2024
But things could soon start looking up for King Crypto as market analyst Bitcoin Trapper showed that the 3-month chart for Bitcoin is similar to gold's 3-month chart from 1976, just before the yellow metal started to rally higher.
The $BTC 3 month chart is impressively similar to the #GOLD 3 month chart in 1976 before it started its face melting rally to its 17 trillion $ marketcap its @ today
I’ve overlapped them to show the similarities. If you can’t see it you need ? pic.twitter.com/YzeIYuiNEv— ฿ITCOIN?TRAPPΞR (@BITCOINTRAPPER) September 10, 2024
And according to Charting Guy, a Bitcoin/gold fractal that has correctly predicted Bitcoin’s price action for the past 1000 days shows that BTC should start trending higher after October.
the $GOLD fractal that i’ve been sharing just hit 1000 days of being correct for predicting $BTC price action
fade at your own risk pic.twitter.com/cad6oR3A4m— Charting Guy (@ChartingGuy) September 9, 2024
At the time of writing, Bitcoin trades at $57,887, an increase of 0.42% on the day, while spot gold trades at $2,511.80 per ounce, a decrease of 0.17% on the session.
