Bitcoin And Gold Share 85% Correlation – What Sets Them Apart?

Bitcoin is currently testing a crucial support level after a 9% decline from its recent local highs. The broader crypto market, alongside traditional markets, has been experiencing heightened volatility, driven by the ongoing conflict between Israel and Iran. This geopolitical tension sends shockwaves through global markets, and Bitcoin is no exception.

Amid this turbulence, many analysts focus on Bitcoin’s growing correlation with Gold as a key metric to watch. BTC, often called “digital gold,” has been showing an increasingly strong connection to the precious metal, especially in times of uncertainty. 

One prominent analyst, Axel Adler, has shared compelling data and insights highlighting this positive correlation. According to Adler, the two assets are moving in tandem, with investors turning to them as potential safe-haven assets during periods of global instability.

As BTC hovers near a critical support level, analysts and investors alike are paying close attention to its price movements in the coming days. Whether BTC can hold this support or experience, further downside will be decisive for the crypto market and its perceived relationship with Gold.

Bitcoin Volatility: The Main Difference With Gold

Bitcoin has long been regarded as a safe haven and store of value, much like Gold, particularly as it gained popularity as a distinct asset class. Bitcoin and Gold are commonly used by investors to hedge against economic uncertainty and inflation, making them go-to assets in times of financial instability.

While some view the comparison between the two as a matter of competition, one thing remains certain: there is a positive correlation between BTC and Gold.

According to CryptoQuant’s on-chain analyst Axel Adler, this correlation has grown stronger over the past year. Adler recently shared a Bitcoin vs. Gold futures chart on X, revealing that Bitcoin and Gold have shown an 85% positive correlation during this period.

He emphasized that both assets react similarly to macroeconomic factors, such as rising inflation or geopolitical tensions, which drive demand for assets perceived as more stable.

However, there’s a significant distinction between the two: volatility. While Bitcoin and Gold often move in the same direction during uncertain times, BTC is far more volatile.

This higher volatility can make BTC more attractive to risk-tolerant investors seeking larger gains, while Gold tends to appeal to more conservative investors looking for steady value preservation. This difference is key for investors when choosing between these safe-haven assets.

BTC Testing Crucial Demand Level 

Bitcoin is trading at a crucial demand level around $60,695, holding just above the daily 200 exponential moving average (EMA) at $59,891. This EMA is a key support level, signaling strength when the price exceeds it. The current price action is critical, as bulls need to regain momentum to prevent further downside.

For bulls to reclaim control, BTC must rise above the daily 200 moving average (MA) at $63,613, the most important level to watch in the short term. A break above this level would indicate a potential shift back into bullish territory and could ignite a rally toward higher levels.

However, if Bitcoin fails to close above the 1D 200 MA and EMA, a deeper correction to the $57,500 level is likely. This would signal further weakness, potentially leading to a more extended period of consolidation or downward pressure. The coming days will be crucial in determining Bitcoin’s direction as investors closely monitor these key support and resistance levels.

Featured image from Dall-E, chart from TradingView