Weak US employment data, new tariffs, the war in Europe and the Middle East, and the political crisis in France have increased global uncertainties this week.
While gold is climbing to record highs, Bitcoin maintains its high correlation with the tech-heavy Nasdaq 100 index.
Cryptocurrency research firm Ecoinometrics, in its assessment of X, said, “Bitcoin’s correlation regime is still tied to risky assets. The separation into digital gold has not yet occurred.”
Data shows that Bitcoin’s correlation with gold is near zero. It also has almost no correlation with traditional safe-haven US Treasury bonds. Ethereum, however, trades even more closely with risk assets than Bitcoin.
Markets will be watching next week’s Fed meeting. According to Ecoinometrics, macroeconomic uncertainty must diminish for the bull market to gain momentum. “The best-case scenario is for the Fed to confirm that it will either remain committed to its interest rate cut path or accelerate the process,” the report stated. However, if the opposite happens—a hawkish surprise—both tech stocks and Bitcoin are expected to take a hit.
André Dragosch, Head of European Research at Bitwise, also stated that the volatility in the crypto market is due to macro developments, saying, “The current weak performance is not due to micro developments, but to the decline in global growth expectations and the decrease in investors’ risk appetite.”
However, Dragosch stated that he remained optimistic about the medium- to long-term outlook: “I remain very bullish due to the acceleration in global liquidity growth. The Fed’s continued interest rate cuts and the continued easing of financial conditions will likely create a positive environment for markets.”
However, Dragosch noted that downside risks are still on the table in the short term, saying the Fed meeting has become a “double event” for Bitcoin: “An aggressive cut will send risky assets soaring, and if dovish expectations are disappointed, Bitcoin will be dragged down along with tech stocks.”
*This is not investment advice.