Bitcoin Decouples From Gold as Crypto Continues in Bearish Phase

Another technical indicator suggests even tougher times could be in the cards for the crypto market.

Bitcoin price has decoupled from gold in recent weeks as the cryptocurrency continues to trade in a bearish phase, while the precious metal has been hitting record highs amid broader risk aversion.

Another technical indicator suggests even tougher times could be in the cards for the crypto market.

Investors in this current risk-averse environment appear to be favoring traditional safe-haven assets like gold as opposed to bitcoin (BTC). The correlation between the two assets has turned sizably negative of late, according to data from on-chain analytics firm CryptoQuant.

This comes as gold prices have been pushing to new record highs above $2,500 per ounce, while bitcoin has been declining and now sits more than 20% below its all-time high above $73,000 from March.

Meanwhile, U.S. stocks have also been struggling, with the S&P 500 slipping 3.6% since August 30. But bitcoin's price performance has been diverging from that of the stock market in recent months, with crypto prices showing less sensitivity to the Federal Reserve's monetary policy and economic data.

Still, CryptoQuant’s Bull-Bear Market Cycle Indicator has been in a BEAR phase since August 27, when BTC was trading at $62,000. This indicator is now signaling that the bear market may be continuing.

Another technical indicator, the MVRV (market-value-to-realized-value) ratio, has also been below its 365-day moving average since August 26, which suggests a further price correction may be on the cards, according to CryptoQuant. The MVRV ratio dipping below the moving average previously acted as a precursor to a 36% drop in May 2021.

The decline in bitcoin's price has also come alongside a drop in the U.S. dollar index, another indicator of broader risk aversion and uncertainty, according to CryptoQuant. The dollar index fell 0.2% on Monday.

This story was edited to correct the directionality of the correlation between bitcoin and gold, which is sizably negative, not sizably positive.

EDIT (DEC. 13, 2023 – 10:30 UTC): This story has been updated to clarify that Block, Inc. was previously known as Square, Inc. and to note that Bullish is a separate entity from Block, Inc. or Blockstream. Block, Inc. was an early investor in Blockstream, but Blockstream later acquired Bullish from Block, Inc. in 2023.

The copy also now states that both Block, Inc. and Bullish have interests in CoinDesk's operating entity, rather than CoinDesk itself.

Please note that our privacy policy, terms of use, cookies and do not sell my personal information policies have been updated effective December 20, 2023. We encourage you to review the updated policies.

CoinDesk is an independent operating subsidiary of Digital Currency Group, which helps to support CoinDesk's work through its investment in CoinDesk, Inc. CoinDesk was acquired Bullish, Block.one; both companies have interests

Oliver Knight is a CoinDesk reporter based between London and Lisbon. He does not own any crypto.