Bitcoin Correlation With Gold Hits 5-Month High, But What About Ethereum?

Bitcoin’s correlation with one of the oldest and arguably safest investment instruments, gold, has risen to a five-month high, according to data from IntoTheBlock.

At the same time, Ethereum’s numbers point to the exact opposite, even though ETH is supposed to be ultrasonic money after some of its upgrades in recent years.

BTC, Gold Correlation Increases

Due to many of the similarities between the two, such as the limited supply and lack of central authority behind them, gold and bitcoin have been frequently compared, though mostly by supporters of the digital asset In fact, they even argue that BTC has an advantage over the precious metal due to its existence in the digital world and its known hard supply of 21 million that has ever existed.

However, bitcoin is a newer asset with less history, a smaller market cap, and a highly volatile nature. This has been the most vocal criticism of BTC doubters, such as Peter Schiff. Their actions tend to deviate at certain times but should follow a similar trajectory in times of economic uncertainty, wars, etc.

Data from IntoTheBlock shows that this has been the case on a few occasions this year. At first, they both went into uncharted territory simultaneously in March and April, but separated in May and July. However, the trend has been positive since the summer and hit a high of 0.75 yesterday, which is the highest level since April.

Bitcoin’s correlation with gold has been trending upwards, now reaching its highest level since March.

Instead, $ETHThe correlation with gold remains minimal and largely insignificant.

Key contributions

Bitcoin’s rising correlation over the past few months aligns with… pic.twitter.com/fGstlFiAT6

— IntoTheBlock (@intotheblock) September 24, 2024

CryptoPotato recently compared the YTD returns of the two assets, concluding that BTC has fared much better, albeit far from its all-time high (recorded in March), while the precious metal continues to make new highs. It last hit $2,670/oz today.

Ethereum, gold on a different path

The ITB publication noted that while investor behavior highlights “bitcoin’s evolving role in macroeconomic hedging,” the same cannot be said for the second-largest cryptocurrency.

“Ethereum’s limited correlation with gold points to its position as a more speculative and growth-driven asset. Its price movements are less influenced by external economic factors and more driven by the underlying ecosystem, such as the ‘DeFi activity and participation’.

While this casts doubt on the ultra-money narrative for ETH, it just goes to show that Ethereum is playing a different role in the crypto market.

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