Current market dynamics suggest insufficient capital to fuel simultaneous bull runs in both gold and its digital counterpart, Bitcoin (BTC).
Gold has consistently hit record highs in recent weeks. Meanwhile, Bitcoin, despite operating in a favorable environment with key bullish drivers like monetary policy easing, ETF inflows, and growing corporate adoption, has struggled to gain significant momentum.
This trend indicates that Bitcoin might not experience a sustained upward trajectory until investor enthusiasm for gold subsides.
Notably, gold experienced a rare decline on Wednesday, falling 1.5% to $3,759 per ounce. This pullback seemingly "allowed" Bitcoin to post a rare positive session, with BTC rising 1.7% to $113,700.
Long-Term Perspective Reveals Correlation
Although gold and Bitcoin appear to be moving inversely in the current cycle, fundamental logic suggests both assets should correlate over extended periods. This is due to their shared appeal as hedges against government overspending and inflation.
Long-term data confirms this correlation. Year-to-date, gold has gained 42%, significantly outperforming Bitcoin's 22% increase, but both have trended positively. Since the beginning of 2024, gold is up 82%, while Bitcoin has advanced 155%.
Since the start of 2023, gold has more than doubled in value, whereas Bitcoin has surged more than six-fold (though this measurement starts from the low point of the 2022 crypto winter).