Bitcoin’s Role as Digital Gold Questioned Amid Record Gold Prices and Market Correlations

• As global economic tensions escalate, gold prices have surged to an unprecedented $3,317 per ounce, raising questions about Bitcoin’s safe-haven status.

• Despite recent price rebounds, Bitcoin experienced an 11.8% decline in Q1, leading analysts to explore its correlation with traditional tech stocks.

• Paybis CEO Innokenty Isers noted that Bitcoin’s low correlation with gold at 0.2 suggests a divergence in their market behaviors.

Explore the latest developments in the crypto market as gold soars to new heights while Bitcoin struggles, challenging its ‘digital gold’ narrative.

Is Bitcoin Akin to a Tech Stock? Analyst Weighs In

Gold prices have reached an all-time high of $3,317 per ounce, a remarkable 25% increase since the start of the year. Analysts highlight that this surge reflects growing investor anxiety over the turbulent global economic climate, driven in part by escalatory trade wars among major economies.

This backdrop has ignited discussions around Bitcoin’s performance and whether it can emulate gold’s upward trajectory or remain stifled by macroeconomic pressures. Bitcoin’s recent 11.8% decline in the first quarter has raised questions about its resilience as a hedge against traditional market downturns.

“Bitcoin has closed the first quarter of 2025 with a significant decline and recent price fluctuations underscore its sensitivity to macro-economic factors,” stated Paybis Chief Executive Officer Innokenty Isers in an interview with COINOTAG.

Isers argues that, for the time being, Bitcoin’s behavior closely resembles that of traditional equities. “Bitcoin’s correlation with equities—most notably with a 0.72 correlation to the S&P 500, challenges its status as ‘digital gold’ in the short term,” he added.

Moreover, Isers points out that Bitcoin shows a low correlation with gold, currently at 0.2. This indicates significant divergence in the return profiles of these two asset classes.

“Historically, Bitcoin’s correlation with gold has rarely surpassed 0.3, suggesting a limited co-movement between the two assets. In recent months, Bitcoin has behaved more like a tech stock than a traditional safe-haven asset,” he remarked.

The Paybis executive also highlighted that the current market sentiment is prevalent, as evidenced by Bitcoin’s Fear and Greed Index, which stands at 29, indicating that fear still reigns despite slight price recoveries.

“In March alone, Bitcoin ETFs witnessed significant outflows amounting to $812.3 million, with BlackRock’s IBIT ETF experiencing the largest withdrawal,” Isers stated.

Spot Bitcoin ETF Flows. Source: SoSoValue

According to a recent observation from QCP Capital, despite minor price rebounds, Bitcoin has not shown signs of safe-haven attributes typically associated with gold or other traditional commodities.

The upcoming speech by US Federal Reserve Chair Jerome Powell at the Economic Club of Chicago is anticipated to shed light on potential rate cuts and the impact of tariff-induced inflation, contributing to the ongoing economic narrative that surrounds Bitcoin.

Earlier in the week, Fed Governor Christopher Waller indicated that the central bank may be underestimating the persistence of inflationary pressures, making current market dynamics even more critical to Bitcoin’s prospects.

Chart of the Day

Gold vs. Bitcoin Price Performance. Source: TradingView

Byte-Sized Alpha

• Coinbase has successfully concluded the SEC’s review of its financial disclosures without any required amendments, marking a significant regulatory victory.
• Bybit reversed its PAWS airdrop just before the meme coin’s official launch due to user complaints regarding inconsistent token allocations.
• Semler Scientific plans a $500 million securities offering to expand its Bitcoin holdings, even with a 5% unrealized loss on previous BTC investments.
• Local governments in China are reportedly offloading seized crypto assets amidst ongoing economic challenges.
• VanEck proposes “BitBonds,” which blend Treasury securities with a 10% Bitcoin allocation, as a potential solution for addressing the U.S.’s $14 trillion debt refinancing needs.

Crypto Equities Pre-Market Overview

Conclusion

In summary, the recent surge in gold prices starkly contrasts with Bitcoin’s struggles in the current economic environment. As investors weigh macroeconomic uncertainties, the narrative surrounding Bitcoin as a reliable safe haven seems increasingly tenuous. Moving forward, market sentiment will largely depend on upcoming regulatory decisions and the Fed’s approach to inflation, which may significantly influence Bitcoin’s behavior and correlation with traditional assets.