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Bitcoin (BTC) has entered a major bearish phase, driving a wedge between its price action and that of gold. This decoupling of Bitcoin and gold comes as macroeconomic factors push investors toward traditional safe-haven assets, such as gold, while steering them away from speculative assets like cryptocurrencies.
According to recent analysis from CryptoQuant, Bitcoin’s price has been in a steady decline, while gold has surged to new highs. This divergence has resulted in a negative correlation between Bitcoin and gold, signaling a shift in investor sentiment.
Historically, Bitcoin has been compared to gold as a store of value, with many proponents claiming it could serve as a hedge against inflation. However, the current price movement of Bitcoin and gold paints a different picture. While gold continues its upward trajectory, Bitcoin has struggled to maintain its footing, dropping by 16% since early July.
The negative correlation between Bitcoin and gold reflects a broader trend in which investors are retreating to safer assets amid global economic uncertainty. Gold, often seen as a safe haven, has benefited from rising geopolitical tensions, inflation concerns, and market volatility. In contrast, Bitcoin, viewed by many as a speculative asset, has fallen out of favor, leading to a sharp decline in its price and an increasing decoupling from gold.
CryptoQuant analysts have noted that this growing gap between Bitcoin and gold is emblematic of a risk-averse environment. “Investors are opting for assets with a long history of stability, such as gold, instead of speculative digital currencies,” the analysts said. The shift in sentiment underscores the hesitancy among investors to hold onto Bitcoin during times of economic stress.
While the relationship between Bitcoin and gold is weakening, Bitcoin’s price movement has become increasingly tied to the U.S. stock market, particularly the Nasdaq 100 Composite index. Since early July, the Nasdaq has experienced a 10% decline, and Bitcoin has mirrored this downturn, falling by 16%. The correlation between Bitcoin and the Nasdaq has grown from -0.85 to 0.39, indicating that Bitcoin is following the stock market’s lead.
CryptoQuant’s analysts remarked that the alignment between Bitcoin and the stock market is “not surprising,” given the broader macroeconomic headwinds. “In times of financial uncertainty, Bitcoin tends to behave more like a risk-on asset,” they explained. This positive correlation suggests that Bitcoin is increasingly vulnerable to stock market downturns, reinforcing the idea that Bitcoin is still far from being a safe-haven asset like gold.
In addition to its relationship with gold and the stock market, Bitcoin’s performance has also been influenced by the U.S. dollar. The dollar has weakened against other currencies, but this hasn’t helped Bitcoin. In fact, Bitcoin has followed the dollar’s decline, which CryptoQuant analysts believe could indicate broader financial stress or investor risk aversion.
“When the dollar weakens and Bitcoin declines simultaneously, it often points to a period of heightened financial risk,” the analysts said. The parallel movement of Bitcoin and the dollar contrasts sharply with Bitcoin and gold, which have moved in opposite directions, emphasizing the complex dynamics between the cryptocurrency and traditional financial markets.
The bearish trend in Bitcoin and gold has cast a shadow over Bitcoin’s valuation metrics. CryptoQuant’s Bull-Bear Market Cycle Indicator officially entered a bear phase on August 27, when Bitcoin was trading around $62,000. At the time of writing, Bitcoin had dropped further to $57,880. This continued bearish phase is a signal to many market observers that a significant rally is unlikely in the near future, and further price corrections could be on the horizon.
Bitcoin’s Market Value to Realized Value (MVRV) ratio, another key indicator, has remained below its 365-day moving average since August 26, pointing to a high risk of additional price declines. Historically, when Bitcoin’s MVRV ratio falls below this threshold, it has signaled a lack of fresh demand for the asset, a pattern that is currently playing out.
CryptoQuant analysts also noted that Bitcoin’s long-term holders are spending their coins at lower profit margins, another bearish signal. “Long-term holders are no longer realizing significant profits, which suggests there is little new demand for Bitcoin at these price levels,” they explained.
As the decoupling between Bitcoin and gold continues, analysts are cautious about Bitcoin’s immediate future. While gold enjoys the benefits of investor confidence, Bitcoin seems trapped in a bearish phase, susceptible to broader macroeconomic trends. Factors like rising inflation, central bank policies, and stock market performance are all likely to impact Bitcoin’s price movement in the coming months.
Despite the growing gap between Bitcoin and gold, some analysts believe Bitcoin still has long-term potential. Lars Seier Christensen, co-founder of Saxo Bank, commented on the situation: “While Bitcoin is decoupling from gold in the short term, I think its digital nature will make it a valuable asset in the long run. But for now, investors are clearly favoring assets with a more established track record.”
However, with no signs of an immediate rally and the macroeconomic environment still uncertain, Bitcoin could continue to face significant pressure in the short term. As the bearish signals persist, the divergence between Bitcoin and gold highlights the ongoing struggle for Bitcoin to establish itself as a stable store of value.
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