Original author: ChandlerZ, Foresight News
At the beginning of 2025, the global capital market fell into a world of ice and fire. Recently, the spot gold price has repeatedly broken new highs. As of February 16, the COMEX gold futures price once soared to US$2,968 per ounce, with the largest increase in the year close to 10%, just one step away from the US$3,000 mark.
After breaking through the high of $100,000, Bitcoin continued to fluctuate between $90,000 and $110,000. Its weakness this year is contrary to its status as a new safe-haven asset. This fluctuation not only exposes the difference in pricing logic between the two types of assets, but also points to the recalibration of risk scale by global capital in the Trump 2.0 era.
Bitcoin vs. Gold: From Risk-Avoidance Narrative to Functional Differentiation
The evolution of the linkage between Bitcoin, U.S. stocks and gold is essentially a drifting process of identity recognition in the process of financialization. Measured by the correlation coefficient between Bitcoin and traditional assets, the correlation shows a significant dynamic change feature.
As a traditional safe-haven asset, gold has a relatively complex relationship with Bitcoin. From the perspective of long-term data, the correlation between Bitcoin and gold shows obvious instability, frequently fluctuating between positive and negative ranges. In the early days, the correlation coefficients between the two were mostly negatively correlated, and Bitcoin was regarded as a digital substitute for gold. However, in the market turmoil after 2022, the two have repeatedly experienced synchronous market conditions. In late 2024, the correlation tended to be positive, but the fluctuations were still obvious.
This contradiction stems from the difference in the properties of the two: the safe-haven function of gold relies on its physical properties and historical consensus, while the narrative of Bitcoin digital gold relies more on market sentiment and technical expectations. When Bitcoin hit a record high in 2021, the price of gold was at a staged low. Starting in 2024, the two rose simultaneously due to factors such as the central banks gold purchases and the approval of the Bitcoin ETF. It can be seen that the correlation between the two is driven by staged events, rather than the inevitable connection of intrinsic value logic.
US stocks linked, double helix structure under liquidity siphoning
In terms of U.S. stocks, Bitcoin is often classified as a risk asset, and its price trend shows a significant positive correlation with the Nasdaq index, which is dominated by technology stocks. This correlation reached its peak in 2021, and both hit historical highs and then pulled back, and then bottomed out and rebounded at the end of 2022, showing the consistency of market behavior driven by risk preference.
The correlation between Bitcoin and the SP 500 index shows a relatively mild positive correlation, with the correlation coefficient remaining between 0 and 0.5 most of the time. Bitcoins increase is significantly greater than the SP 500, and the price synergy is clearer in the high point area. This relationship was particularly evident in late 2024, when risk assets were generally boosted as expectations of the Federal Reserves shift to a dovish stance increased.
During the period when the Federal Reserve released interest rate cut signals, this synergy even exceeded the negative correlation strength between traditional technology stocks and bonds. The correlation strength between the two has exceeded the group effect between traditional technology stocks, suggesting that cryptocurrencies are systematically embedded in the valuation system of growth stocks. However, it is worth noting that this positive correlation is significantly asymmetric: in the market downturn cycle, the correlation coefficient between the decline of Bitcoin and US stocks is not high, revealing its excess risk premium characteristics under the background of high volatility.
This phenomenon can be explained from the perspective of market psychology and liquidity. When global economic expectations are positive, investors risk appetite increases, and funds flow into US stocks and Bitcoin at the same time; when market risk aversion heats up, both may be under pressure. According to QUICK FactSet data, the total market value of stocks denominated in US dollars in the world has increased by US$13.6 trillion from the end of 2023 to US$121.8 trillion. Bitcoin has risen by more than 150% during the same period, confirming the joint promotion of both by loose liquidity and risk appetite. However, the high valuation of US stocks also implies a risk of callback. If the stock market corrects, Bitcoin may face synchronous pressure, while gold may benefit from safe-haven demand.
Reshaping financial attributes
The changes in the linkage between Bitcoin, U.S. stocks and gold reflect the structural transformation of the main participants in the crypto market. In the early days, Bitcoin was mainly held by retail investors and geek communities, and its price was independent of the traditional financial system. However, after 2020, the involvement of institutional investors accelerated its financialization process, making it more susceptible to the contagion of U.S. stock sentiment. The growth of open interest in Bitcoin futures contracts at the Chicago Mercantile Exchange (CME) further strengthened this path. In addition, institutional variables such as the approval of the U.S. SEC for the entry of Bitcoin spot ETFs and differences in regulatory policies among countries also have a long-term impact on the asset attribute positioning of Bitcoin.
The high-level fluctuations of Bitcoin after breaking through the historical high of $100,000 are due to the interaction of multiple market forces. On the one hand, early investors gradually realized their profits at high levels, while the new funds brought by institutional channels such as ETFs formed a strong undertaking. This increase and decrease in the power of buyers and sellers caused the price to fluctuate violently within the range.
On the other hand, the current market is still in the brewing period of easing expectations, and large-scale liquidity has not yet been launched. The market is mainly composed of existing funds rotating between different price levels. The lack of continuous incremental funds entering the market also limits the upward momentum after breaking through the new high. At the same time, the use of leverage tools such as futures and perpetual contracts has become more active. High leverage has magnified the price fluctuation range, and frequent forced liquidation has further exacerbated market volatility.
But in general, the reflexivity of technological innovation is also nurturing new possibilities. Currently, Bitcoin is being included in the asset-liability management framework of sovereign wealth funds. Appropriate allocation of crypto assets can improve tail risk defense capabilities while maintaining a stable Sharpe ratio. This functional evolution indicates that the correlation between crypto assets and traditional assets will present a more complex hierarchical structure, fluctuating as risky assets during macroeconomic stability periods, releasing nonlinear correlations during systemic crises, and ultimately developing an independent asset class positioning.
In the myth of Noahs Ark, clean creatures enter in pairs, while unclean creatures go alone. The correlation dilemma between Bitcoin and traditional assets is like a financial monster that cannot find a companion in the flood of digital civilization. Perhaps this lack of correlation is its true nature. It does not need to be benchmarked against the hard currency of thousands of years, nor does it need to be attached to the technology bubble. Instead, it redefines the value coordinates as a heterogeneous asset native to the blockchain.
