Bitcoin and correlations — Examining the relationship between BTC, gold and the Nasdaq
Some news sources have been fond of making comparisons between Bitcoin’s (BTC) price action and that of other assets. In particular, the two most commonly compared asset classes are gold and tech stocks.
While a correlation holds, it tends to be a big news story. Throughout much of 2022 and early 2023, for example, the “Bitcoin trades in tandem with tech stocks” narrative was prevalent. Since that correlation has broken down, however, there doesn’t seem to be much related news coverage.
Now a new narrative has taken the spotlight: that of Bitcoin’s correlation to gold. Ever since the failures of Silvergate, Signature Bank, and Silicon Valley Bank in March, both assets have rallied. Both of these narratives make sense on the surface. If Bitcoin is to be seen as a speculative asset, then it might trade similar to a tech stock. And if Bitcoin is more of a safe-haven asset, a correlation to gold seems reasonable.
It’s important to note, however, that correlations can come and go. Just because two assets share a correlation for a time doesn’t always mean they share a place in the market long-term. And when zooming out to larger timeframes, it might be possible to rule out correlations of any kind.
Let’s examine both of these correlations on a one-year basis and see if there’s any merit to them.
Year-to-date, Bitcoin has gained roughly 58%, rising from $16,600 at the start of the year to over $26,000 today. On the same timeframe, the NASDAQ has gained about 36%, rising from 11,000 to just shy of over 15,000.
Meanwhile, gold has risen by just over 7% YTD.
According to the 90-day correlation coefficient, BTC is positively correlated to gold (0.58) and negatively correlated to tech stocks (-0.65) right now. For the majority of this
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