In the current risk-averse environment, investors are increasingly favoring traditional safe-haven assets like gold over Bitcoin (BTC). According to data from CryptoQuant, the correlation between Bitcoin and gold has turned significantly negative. While gold recently hit record highs above $2,500 per ounce, Bitcoin has struggled, now sitting more than 20% below its all-time high of $73,000 from March.
This shift comes as U.S. stocks have faltered, with the S&P 500 declining 3.6% since August 30. Bitcoin’s weakness is reflected in CryptoQuant’s Bull-Bear Market Cycle Indicator, which has been in a “BEAR” phase since August 27, when BTC was trading at $62,000.
Additionally, the market-value-to-realized-value (MVRV) ratio has remained below its 365-day moving average since August 26, signaling the potential for further price corrections. The last time the MVRV ratio dropped below this threshold, Bitcoin saw a 36% drop in May 2021.
The drop in Bitcoin’s price has also coincided with a decline in the U.S. dollar index, another sign of growing risk aversion and market uncertainty.
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