Bitcoin’s Correlation With Gold Turns Negative As It Enters Bear Phase: CryptoQuant

Bitcoin (BTC) price has entered a bearish phase, stemming from the asset's steady decline and range-bound movement. For this reason, the largest cryptocurrency is separated from gold.

According to CryptoQuant analysts, the price of Bt metal has been falling, causing their correlation to turn negative.

Bitcoin Decuples from Gold

The negative correlation between bitcoin and gold reflects a risk-averse environment where investors are choosing a traditional safe haven over speculative assets like cryptocurrencies. As BTC declines in metal, the crypto asset is moving in the same direction as the lower US stock markets. Analysts say this is a sign that macro headwinds will affect BTC.

Since the beginning of July, the Nasdaq 100 Composite index has fallen by 10%, and BTC has fallen by 16%, their correlation has increased from -0.85 to 0.39. CryptoQuant concluded that this positive correlation between bitcoin and the Nasdaq index is normal. Therefore, BTC will be negatively affected by the decline in the stock market.

Bitcoin is moving in the same direction as the US dollar, which has weakened against other currencies. According to CryptoQuant, a weakening dollar and a drop in BTC could indicate broader financial stress or risk aversion as global markets face uncertainty. This would cause investors to flee the US dollar and put them at risk.

Will there be more corrections?

Bitcoin's decline has caused its valuation metrics to turn bearish. CryptoQuant's Bull-Bear Market Cycle Indicator It entered a bear phase on August 27, when BTC hovered around $62,000. At the time the property was listed, it was valued at $57,880. While the indicator remains at this level, analysts do not expect a significant rally, and the market may face further correction.

Moreover, Bitcoin's current state has been seen on two separate occasions in the past. The asset saw 30% corrections in March 2020 and May 2021, and the bull-bear market cycle indicator remains in bearish territory.

Additionally, Bitcoin's Market Value to Real Value (MVRV) ratio is below its 365-day moving average since August 26, indicating the risk of a further price correction.

Meanwhile, signs of Bitcoin's bearishness can be seen in lower profit margins at the expense of long-term owners of the asset. This is evidence of the lack of new demand for BTC.