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Why Bitcoin’s correlation with gold just hit a record high

Why Bitcoin’s correlation with gold just hit a record high

As the final full trading week of 2025 begins, financial markets across Asia are retreating under mounting doubts about the sustainability of the AI-driven tech rally that has powered global equities for much of the year.

The MSCI Asia Pacific index declined 0.7 per cent, with South Korea home to leading semiconductor firms and a bellwether for AI infrastructure demand falling 1.5 per cent after a tech-led selloff on Wall Street. Chinese equities also edged lower amid weak macro data, retail sales growth hit its lowest level since the pandemic, and fixed asset investment continued to slump. Meanwhile, US equity-index futures rose modestly by 0.2 per cent, hinting at potential stabilisation.

In this volatile mix, gold extended its rally for a fifth consecutive day, up more than 60 per cent year-to-date, while silver has more than doubled, both on track for their best annual performance since 1979. These moves reflect a broader shift in investor psychology away from speculative growth and toward capital preservation.

The cryptocurrency market, which surged dramatically through 2025 alongside tech equities, is now exhibiting signs of strain. Bitcoin and the broader market dipped 0.8 per cent in the past 24 hours, extending a 4.8 per cent monthly decline. This correction is not driven by a wave of selling but by a confluence of structural vulnerabilities, evaporating liquidity, collapsing sentiment, and an ongoing reset in leveraged positioning. Together, these forces are exposing the fragility beneath Bitcoin’s recent price stability.

A key red flag comes from on-chain data showing a sharp decline in Bitcoin exchange flows. According to CryptoQuant analysts, inter-exchange flows, the movement of BTC between trading venues, have slowed to levels not seen since 2018. This metric is critical because it reflects the activity of arbitrageurs and market makers who ensure consistent pricing and deep order books across platforms. When these flows dry up, exchanges become siloed, and liquidity thins.

The consequence is a market hypersensitive to even modest trades. Despite Bitcoin’s apparent calm, it has traded sideways between US$80,000 and US$94,000 since early December; the underlying mechanics have grown precarious. Exchange balances are already near historic lows, meaning there is little immediate sell pressure, but also minimal buffer to absorb shocks. In such conditions, price stability becomes illusory, and sharp, unexplained swings become more likely.

This liquidity crunch directly amplifies volatility risk. Spot trading volumes have plunged 36 per cent in 24 hours, while derivatives volume fell by 35.9 per cent. Thin order books mean slippage increases, and directional moves accelerate. Altcoins suffer disproportionately in such environments. Their market share, or altcoin dominance, has slipped to just 29.1 per cent, as traders rotate into Bitcoin, the perceived safest haven in crypto. Bitcoin’s dominance now stands at 58.6 per cent, underscoring a clear flight to quality within the digital asset space.

Sentiment has also deteriorated sharply. The Crypto Fear & Greed Index has dropped to 24 out of 100, nearing November’s extreme fear low of 16. Social media analysis reveals growing scepticism about Ethereum’s revenue model and the economic sustainability of Layer 2 ecosystems, two pillars of the post-merge narrative.

Investors are increasingly prioritising downside protection over yield or speculative upside. This shift is mirrored in the broader financial system. Stablecoin ETFs have seen US$9.97 billion in outflows this month alone, draining liquidity from risk assets and reinforcing a defensive posture across the board.

Simultaneously, the derivatives market is undergoing a necessary but painful deleveraging. Bitcoin liquidations surged by 1,528 per cent in 24 hours, reaching US$59.09 million, with 97 per cent stemming from long positions. These are largely leveraged bets placed during the October rally toward US$126,000 that are now being unwound. This is not a panic-driven collapse. Open interest in Bitcoin futures has actually increased by 9.8 per cent, suggesting new participants are likely entering with a bearish or neutral bias.

Funding rates, which had turned deeply negative, have rebounded to plus 0.001 per cent, indicating a temporary balance between buyers and sellers. According to CryptoQuant, the combined open interest and funding Z-score sits at minus 0.28, slightly below its historical average. This signals a gradual reduction in leverage rather than a disorderly liquidation cascade, a reset, not a rout.

This nuanced picture matters. The current market fragility stems not from overwhelming selling pressure but from a lack of active participation. Traders are avoiding large positions, liquidity providers have withdrawn, and sentiment has turned cautious. Long-term fundamentals remain intact.

Institutional adoption continues, on-chain supply dynamics stay favourable, and Bitcoin’s correlation with gold has spiked to an extraordinary plus 0.93 over the past 24 hours. This suggests a growing cohort of investors now views Bitcoin less as a tech proxy and more as a monetary asset, a development that could decouple it from Nasdaq-driven volatility over time.

For now, Bitcoin trades within a narrow US$87,892 to US$90,319 range. A break below US$88,000 could trigger cascading liquidations given the thin liquidity environment, while sustained trading above US$89,000 might attract spot buyers and signal renewed confidence.

The market stands at an inflexion point, where short-term fragility clashes with long-term strength. Until exchange liquidity recovers and sentiment stabilises, Bitcoin will likely remain susceptible to sharp, unpredictable swings, calm on the surface, but increasingly brittle underneath.

 

Source: https://e27.co/why-bitcoins-correlation-with-gold-just-hit-a-record-high-20251215/

Anndy Lian is an early blockchain adopter and experienced serial entrepreneur who is known for his work in the government sector. He is a best selling book author. The latest book is Web4: The Age of Autonomous Intelligence.

www.anndy.com
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From gold to Bitcoin: Where smart money is moving ahead of the Fed’s December cut

From gold to Bitcoin: Where smart money is moving ahead of the Fed’s December cut

Financial markets exhibited surface-level stability last week, but this calm belies a significant recalibration in investor positioning driven by fresh US macroeconomic data and a rapidly crystallising consensus around an imminent Federal Reserve pivot toward monetary easing. The September Personal Consumption Expenditures (PCE) price index, the Fed’s preferred inflation metric, registered a 0.3 per cent month-over-month increase, unchanged from August, while the core PCE excluding food and energy rose 2.8 per cent on an annual basis.

Although this remains modestly above the central bank’s two per cent target, the sustained moderation in underlying price pressures has materially strengthened market expectations for a 25 basis point rate cut at the December FOMC meeting. This shifting policy outlook is already exerting tangible influence across asset classes, subtly but decisively reshaping allocations in equities, fixed income, foreign exchange, and digital assets alike.

US equities edged higher on the week’s final trading day, with the Dow Jones Industrial Average rising 0.22 per cent, the S&P 500 gaining 0.19 per cent, and the Nasdaq Composite climbing 0.31 per cent. The modest advances underscore a market in transition, one that is neither exuberant nor risk-averse but increasingly confident that the tightening cycle has peaked. This environment calls not for aggressive rotation out of US equities but for strategic diversification. Investors benefit from maintaining exposure to high-quality US names while selectively exploring non-US value and mid-cap equities, which offer both relative undervaluation and potential alpha as global monetary policies diverge.

In fixed income, US Treasury yields nudged upward, with the 10-year yield rising nearly 3 basis points to 4.13 per cent and the two-year yield climbing over 3 basis points to 3.56 per cent. The modest yield bump reflects a temporary pause in the rally that preceded the data release, but it also creates a more compelling entry point for longer-duration assets.

With the Fed’s pivot now widely anticipated, the widening spread between equities and bonds is beginning to tilt the risk-reward calculus back in favour of quality fixed income. Accumulating high-grade bonds ahead of actual rate cuts positions portfolios to capture both capital appreciation and enhanced yield as the easing cycle unfolds.

The US dollar softened against most major currencies last Friday, a natural consequence of declining real yield differentials as rate cut expectations solidify. Notably, the Japanese yen took a brief pause in its recent appreciation, with USD/JPY edging up 0.1 per cent. This respite appears tactical rather than structural. The Bank of Japan has signalled its readiness to hike rates as early as December, a move that would further compress the yield gap with the US and likely reinvigorate yen strength. Investors should anticipate continued JPY outperformance in the quarters ahead, especially if the Fed’s easing path proves more aggressive than currently priced.

Commodity markets responded with characteristic sensitivity to shifting macro narratives. Brent crude rose 0.77 per cent to settle at US$63.75 per barrel, reflecting both subdued demand concerns and simmering geopolitical risks that continue to underpin oil prices. Gold, however, delivered a more emphatic statement, climbing one per cent to close at US$2121.16 per ounce. The precious metal’s advance was directly fuelled by mounting expectations of near-term Fed easing, reinforcing its role as a defensive hedge in environments of declining real rates and heightened policy uncertainty. Gold remains an essential portfolio component, not as a speculative vehicle but as a stabilising asset amid monetary regime shifts.

In Asia, equity markets closed mixed, mirroring the cautious optimism seen globally. The regional landscape remains bifurcated, with China continuing to attract strategic interest despite structural headwinds. A barbell approach, favouring both high-growth technology names and high-yield dividend payers, offers a balanced exposure to China’s evolving recovery, where consumer sentiment remains fragile, but policy support is intensifying. This dual focus captures both upside optionality and downside protection in an uncertain macro backdrop.

Perhaps the most telling signal of shifting investor psychology emerged in the crypto market, which rose 1.47 per cent over the past 24 hours after a turbulent week. This rebound was not a mere reflexive bounce but the product of three converging catalysts that collectively point toward maturing market dynamics.

First, Binance’s regulatory breakthrough in Abu Dhabi marked a watershed moment for the industry. By securing a full suite of operational licenses under the Abu Dhabi Global Market framework, effective January 2026, the exchange has positioned itself under what many consider a gold-standard regulatory regime. This development directly addresses longstanding concerns about operational and compliance risk, particularly for institutional participants. The market’s response was immediate, with BNB rallying 1.57 per cent on the week, underscoring how regulatory legitimacy now drives valuation as much as technological innovation.

Second, technical indicators offered mixed but ultimately supportive signals. The total crypto market capitalisation, now at US$63.753.1 trillion, broke above its seven-day simple moving average of US$63.753.09 trillion and reclaimed a key pivot point at US$63.753.1 trillion, aided by a bullish MACD crossover. This technical strength coexists with significant fragility. Bitcoin liquidations surged 653 per cent in 24 hours to US$63.75110 million, even as open interest swelled 17 per cent to US$63.75810 billion. Such leverage concentration magnifies downside risk, creating conditions for cascading sell-offs if sentiment sours. Compounding this vulnerability, the Fear and Greed Index remains stuck at 24, deep in Extreme Fear territory, revealing that retail and smaller institutional participants have yet to regain conviction despite the price rebound.

Third, a subtle but meaningful rotation into select altcoins signalled a growing appetite for narrative-driven opportunities beyond Bitcoin. Solana surged 10.89 per cent over the week, while SUI-related tokens gained traction following Grayscale’s filing for an SUI exchange-traded fund. Ethereum’s recent Fusaka upgrade, which lowered Layer 2 transaction costs, further bolstered developer and user activity in scalable blockchain ecosystems. Though the Altcoin Season Index remains low at just 19 out of 100, capital is clearly flowing toward platforms with tangible real-world utility. Solana’s integration into US$63.7514 billion of home equity line of credit infrastructure exemplifies this trend, where blockchain moves beyond speculation into functional finance. Notably, the 24-hour correlation between crypto and the Nasdaq fell to 0.55, suggesting that digital assets are beginning to decouple from broader tech risk, a promising sign of market maturity.

Taken together, these developments paint a picture of a crypto market at an inflexion point. On the one hand, regulatory milestones like Binance’s ADGM approval and real-world adoption in sectors such as DePIN and real-world assets provide durable bullish underpinnings. On the other hand, excessive leverage and persistent fear expose the market to volatility spikes that could erase short-term gains. The critical test lies ahead. Can these strengthening fundamentals overcome a shaky market structure?

Two focal points will likely determine the path forward. First, Bitcoin’s US$63.7591,000 support level, if held, would validate the current rebound and potentially usher in a new leg higher. Second, the January 2026 launch of Binance’s ADGM-regulated operations will serve as a litmus test for institutional inflows, potentially catalysing a broader reassessment of crypto as a legitimate asset class.

In sum, the current market steadiness reflects a delicate balance between fading inflation concerns, anticipated Fed easing, and emerging confidence in digital asset infrastructure. Beneath the calm lies a market preparing for its next major move, one that will hinge not on speculation alone but on the intersection of regulation, utility, and structural resilience.

 

Source: https://e27.co/from-gold-to-bitcoin-where-smart-money-is-moving-ahead-of-the-feds-december-cut-20251208/

Anndy Lian is an early blockchain adopter and experienced serial entrepreneur who is known for his work in the government sector. He is a best selling book author. The latest book is Web4: The Age of Autonomous Intelligence.

www.anndy.com
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Fed rate cut odds hit 85 per cent: Here’s how stocks, crypto, and gold are reacting

Fed rate cut odds hit 85 per cent: Here’s how stocks, crypto, and gold are reacting

Market movements have shaped a complex but increasingly hopeful outlook across both traditional and digital asset markets, primarily fuelled by evolving expectations about Federal Reserve policy. Central to this momentum is a mounting belief that interest rate cuts are on the horizon. Financial markets now place an 84.9 per cent likelihood on a 25 basis point reduction at the December FOMC meeting. This shift in sentiment has ignited a widespread rally, pushing equities, commodities, and cryptocurrencies higher in a coordinated risk-on surge that underscores how tightly asset prices are now linked to macroeconomic signals.

The labour market data released on November 26 provided critical fuel for this optimism. Initial jobless claims for the week ending November 22 fell to 216,000, marking the lowest level since mid-April and coming in well below the median forecast of 226,000. This third consecutive weekly decline signals continued resilience in the employment sector, but in the current environment where inflation appears to be moderating and growth concerns linger, the market interpreted the report as dovish. This interpretation aligns with UOB’s ongoing forecast of a 25 bps cut in December, now seemingly corroborated by real-time market pricing.

Equity markets responded enthusiastically. On Wednesday, November 26, the S&P 500 rose 0.7 per cent, the Nasdaq gained 0.8 per cent, and the Dow Jones Industrial Average climbed 0.7 per cent, with technology stocks leading the charge. The gains extended a four-day winning streak in a holiday-shortened week, underscoring investor confidence in a pivot toward looser monetary conditions.

Notably, the US market closed early in observance of Thanksgiving, leaving Asian markets to carry the momentum into the next trading session. This global transmission of sentiment was evident in South Korea’s KOSPI, which surged 2.67 per cent on November 26 to close at 3,960.87, its strongest single-day advance in weeks. Regional indices across Asia followed suit, reinforcing a strategic tilt toward non-US value and mid-cap equities as sources of alpha, particularly in technology and dividend-yielding sectors.

Fixed-income markets reflected a more cautious recalibration. The yield on the 10-year US Treasury note held steady at approximately 4.00 per cent, while the 2-year yield edged slightly higher to 3.47 per cent, resulting in a 10Y-2Y spread of about 53 basis points. This modest flattening suggests that while near-term rate expectations are shifting, longer-term inflation and growth concerns remain anchored. Nevertheless, the widening spread between equities and bonds is beginning to make fixed income more attractive, prompting institutional investors to accumulate high-quality bonds in anticipation of a Fed pivot gradually. The relative stability of the 10-year yield amid equity rallies suggests the bond market is not fully pricing in aggressive easing but remains open to modest cuts if inflation data cooperate.

Currency and commodity markets further validated the risk-on narrative. The US dollar weakened broadly, with Asian currencies like the Korean won and Singapore dollar strengthening as the expected narrowing of the Fed-Asia yield differential reduced the appeal of dollar-denominated assets. Brent crude oil edged higher to US$63.04 per barrel, supported by expectations that lower interest rates could stimulate global demand. Even more striking was gold’s ascent to US$4,163.51 per ounce, a 0.8 per cent increase that reaffirmed its role as a defensive hedge amid monetary uncertainty. Gold’s performance, up nearly 58 per cent year-to-date, reflects not just inflation hedging but also a broader loss of confidence in fiat monetary regimes, a theme that resonates deeply in the cryptocurrency space.

Speaking of crypto, the digital asset market rallied 2.5 per cent over the 24 hours ending November 27, reclaiming a market capitalisation near US$3.07 trillion, a key Fibonacci retracement level. This rebound emerged from a state of extreme fear, as measured by sentiment indicators, and closely tracked the Nasdaq’s gains, with a 24-hour correlation of plus 0.84. Three interlocking forces drove this recovery.

First, technical indicators signalled a classic oversold bounce. Bitcoin’s RSI-14 had dipped to 36.09, bordering on oversold territory, while the MACD histogram turned positive, reflecting a shift in momentum. This setup was amplified by a short squeeze; US$74 million in leveraged positions were liquidated, with 87 per cent attributed to short sellers. Such dynamics often accelerate upward price action as forced buying meets opportunistic dip-buying.

Second, Ethereum witnessed significant off-exchange accumulation. On-chain data from Santiment showed a 49 per cent weekly decline in ETH exchange reserves, equivalent to roughly US$4 billion in value. This movement suggests large holders, whales, and institutions are withdrawing supply from liquid markets, tightening available float, and reducing immediate sell pressure. The trend was reinforced by BlackRock’s ETH ETF, which recorded US$92.6 million in inflows on November 24, its first positive flow in two weeks. This institutional re-engagement, occurring just as ETH tests the 3,000-dollar resistance level, points to strategic positioning ahead of potential macro catalysts.

Third, macro tailwinds provided the overarching narrative. With an 85 per cent market-implied probability of a December rate cut, risk assets across the board benefited from renewed liquidity expectations. However, sustainability remains uncertain. Bitcoin’s Puell Multiple, a metric comparing daily miner revenue to its 365-day average, stands at 0.67, above historical bear market bottoms but not yet signalling undervaluation. This suggests that while the macro backdrop is supportive, crypto-specific fundamentals have not yet reached a point of compelling long-term value.

In conclusion, today’s rally is a fragile synthesis of technical relief, institutional accumulation, and macro optimism. The alignment between crypto and equities, particularly the Nasdaq, has turned digital assets into a high-beta proxy for Fed policy expectations. This very correlation exposes crypto to reversal if incoming data, such as the US PCE inflation report, contradicts rate-cut assumptions. Should the Fed deliver as expected, the stage may be set for a sustained recovery. But without improvements in on-chain fundamentals, network activity, user adoption, and real yield generation, the rally may prove ephemeral, a mere leveraged echo of traditional market sentiment rather than a foundation for a new paradigm.

 

Source: https://e27.co/fed-rate-cut-odds-hit-85-per-cent-heres-how-stocks-crypto-and-gold-are-reacting-20251127/

Anndy Lian is an early blockchain adopter and experienced serial entrepreneur who is known for his work in the government sector. He is a best selling book author. The latest book is Web4: The Age of Autonomous Intelligence.

www.anndy.com
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