Bitcoin and gold look like two separate stories on the surface. Lay the weekly charts on top of each other, though, and they keep taking turns. Here is the Bitcoin vs gold correlation I have been talking about in interviews and in the Moxie room
I was doing an interview earlier this week with a couple of guys who are deep into commodities and precious metals. For a while now I have said there is an inverse relationship between Bitcoin and gold, so I lined up Bitcoin futures and gold on the same screen, going back to roughly 2018.
Why the Bitcoin vs Gold Correlation Reminds Me of Dark Side of the Rainbow
If you have never seen it, Dark Side of the Rainbow is Pink Floyd’s Dark Side of the Moon played over a muted Wizard of Oz. The band says they never planned it, yet the moment Dorothy opens the door and the film turns from black and white to color is uncanny. That is how this relationship feels to me. It is not perfect, but it is uncanny.
Gold Runs, Bitcoin Rests
There are stretches where the two move together, both rising or both falling. In the major moves, though, they hand off. When gold started to really crank to the upside, Bitcoin went level. When gold declined or leveled out, Bitcoin got its run.
The pattern shows up in the smaller moves too. Bitcoin dipped and gold had a little run. Later, gold picked up first, and as it cupped up into its upper ranges, Bitcoin settled down. Then Bitcoin went up while gold went largely sideways.
The biggest example is the recent one. Gold had its blowoff, exuberant run while crypto was absolutely falling.
What the Bitcoin vs Gold Correlation Says Now
Since that blowoff top, gold has come down and Bitcoin has come up. If the Bitcoin vs gold correlation holds and gold has in fact topped, I think Bitcoin may have bottomed. If gold goes nowhere or drifts slightly lower from here, this could be where Bitcoin actually starts to move.
I don’t know if it’s the kind of traders or a certain amount of money that goes around, but these two take turns being bullish and bearish. I think we are witnessing a major shift. The broader market still needs to get through some better seasonality, so I am watching for the handoff, not forcing it.
The last time crypto cooled off, I explained why I wasn’t long in Crypto’s Rally Just Lost Its Wind. In the video below, I walk the weekly charts side by side so you can see each handoff for yourself.
Your Profit Pilot,
TG Watkins
While I wait to see if gold hands off to Bitcoin, Jon McKeever is putting his method to the test with his own money on the line. His 10-Day Trading Challenge kicks off with a free live session Wednesday, October 21 at 6 PM CT. Reserve your free spot here.
