Bitcoin-Gold 'fund rotation' theory, on-chain analyst "Correlation is overrated"

Source: TokenPost Original Title: Bitcoin-Gold ‘Fund Rotation’ Rumor, On-Chain Analyst Says “Correlation Overestimated” Original Link: https://www.tokenpost.kr/news/cryptocurrency/326292

The narrative that “Bitcoin is digital gold” has long dominated the cryptocurrency market. However, in recent months, while Bitcoin(BTC) has been sideways, gold and commodity markets have shown a sharp upward trend, drawing renewed attention to the ‘fund rotation’ theory that investment funds are moving from gold to Bitcoin, or vice versa. But on-chain data provides insights that this hypothesis may be overestimated.

On-Chain Analyst: “Bitcoin and Gold, Actually Low Correlation”

On-chain analyst Darkfost(Darkfost) pointed out via X(Twitter) that market expectations regarding fund flows between Bitcoin and gold are excessive. He explained, “There is no clear evidence of a fund rotation flow between Bitcoin and gold,” and “the two assets tend to move independently.”

According to the chart shared by Darkfost, when Bitcoin is above the 180-day moving average and gold is below, it is considered a ‘positive signal’; when both assets are below the moving average, it is a ‘negative signal.’ However, the occurrence frequency of these two scenarios is nearly the same, making it difficult to find a consistent correlation.

He emphasized, “We cannot definitively say that Bitcoin’s rise is necessarily due to outflows from gold investments,” and “On-chain analysis alone cannot determine which way funds are flowing.”

Gold and Bitcoin Prices Moving in Different Directions

Market trends also support this analysis. Bitcoin showed strong gains at the beginning of the year but has been moving without a clear direction over the past two weeks. Currently, Bitcoin is around $89,230, with little change over 24 hours, about 30% below its all-time high of approximately $126,000.

Meanwhile, gold prices have continued to rise, surpassing $4,900 per ounce and hitting a new all-time high. While both cryptocurrencies and gold are linked as inflation hedge assets, they are moving in completely different directions.

Bitcoin’s Narrative Still Closer to ‘Independent Asset’

Both gold and Bitcoin are assets that traditional investors regard as inflation hedges, but analysis suggests that their actual fund flows tend to be more separated than synchronized. Darkfost pointed out, “BTC is charting a self-sustaining growth trajectory, and overemphasizing its fund linkage with gold could actually confuse the market.”

This analysis implies that when trading Bitcoin or gold in the future, it is more accurate to analyze each asset’s independent market factors rather than expecting their prices to move in tandem.