Bitcoin and Gold Correlation Falls to Three-Year Low, Historical Data Suggests March Bottom Reached

In March, the correlation index between Bitcoin and gold dropped to -0.9, the lowest level since the end of 2022—when Bitcoin reached a cyclical low of $15,600 following the FTX collapse, and subsequently entered a bull market that lasted over two years. Meanwhile, the Bitcoin/gold ratio has retraced approximately 70%, closely matching the historical characteristics observed at the bottoms of the past three bear cycles.

Historical Pattern of Bitcoin/Gold Ratio Bottoms: The Significance of 70% Retracement

Analyst Michaël van de Poppe conducted a systematic study of the historical trends of the Bitcoin/gold ratio, discovering that the current 70% retracement aligns closely with the levels at the bottoms of the last three bear markets:

2014 Bear Market Bottom: The Bitcoin/gold ratio retraced 86%, after which Bitcoin entered a new upward rally.

2018 Bear Market Bottom: The ratio retraced 83%, and following confirmation of the cycle low, Bitcoin rebounded sharply.

2022 Bear Market Bottom: The ratio retraced 76%, and after bottoming out, Bitcoin initiated a bull run lasting over two years.

Van de Poppe pointed out that the current 70% retracement, combined with a bear market duration of 13 to 14 months, fits the historical bottom characteristics “very well.” He believes that Bitcoin’s price may no longer continue to decline but instead enter a sideways consolidation phase. “This time, it won’t be any different,” he stated directly. Additionally, bullish divergence on the short-term Bitcoin/gold chart further reinforces the technical expectation that Bitcoin will outperform gold in the near term.

CryptoQuant Data: Market Implications of -0.9 Correlation

CryptoQuant’s data shows that the correlation between Bitcoin and gold in March fell to -0.9, indicating a highly inverse relationship. Over the past three years, Bitcoin and gold have generally maintained positive or neutral correlation. When the correlation drops to such an extreme negative value, it often marks a turning point where Bitcoin begins to establish an independent price trajectory.

Market institution Swissblock offers a macro perspective: “Bitcoin first reflects geopolitical risks. It is sold off first, but also rebounds the fastest. The message is clear: Bitcoin’s resilience to shocks exceeds expectations, and it is not being re-priced as a systemic crisis.”

Meanwhile, Peter Brandt notes that gold is forming a “Nine Red Birds” pattern—nine consecutive trading days of closing declines. This pattern has only appeared four times in his career, each time leading to a market that took years to recover, further strengthening the argument that Bitcoin is relatively more attractive compared to gold.

Whale Behavior and Macro Data: Two Key Dimensions for Bitcoin’s Outlook

Despite ongoing geopolitical tensions, on-chain whale activity signals a different story. According to the latest BeInCrypto report, the number of whale addresses holding over 1,000 Bitcoin has risen to its highest level in a year, indicating that institutional holders are quietly increasing their positions rather than panic-selling.

On the macro front, key economic indicators such as the Purchasing Managers’ Index (PMI) and initial unemployment claims will be released this week. These data points often directly influence market expectations for rate cuts and risk appetite. If the data shows economic cooling, it could provide additional upward catalysts for Bitcoin.

Frequently Asked Questions

What does a -0.9 correlation between Bitcoin and gold mean?

-0.9 indicates a highly inverse relationship, meaning gold tends to fall when Bitcoin rises, and vice versa. Historically, such extreme negative correlation often appears at turning points when Bitcoin begins to establish independent upward momentum. The last time this level appeared was at the end of 2022 when Bitcoin hit a cycle low, followed by a more than two-year bull market.

Why is the Bitcoin/gold ratio used as a reference for Bitcoin bottoms?

The Bitcoin/gold ratio measures Bitcoin’s purchasing power relative to gold. Historically, when this ratio drops sharply (more than 70%), it often coincides with Bitcoin’s cyclical bottom. This is because deep retracements typically indicate that major deleveraging and capital transfer phases are complete, laying the groundwork for the next rally.

What does the “Nine Red Birds” pattern in gold imply for Bitcoin?

The “Nine Red Birds” pattern (nine consecutive days of closing declines) historically suggests that gold may enter a prolonged downturn. Coupled with the extreme negative correlation between Bitcoin and gold, if gold continues to weaken, capital may rotate into assets like Bitcoin, providing indirect support for its demand.