October has revealed a fundamental divergence of Bitcoin and gold, two assets that are frequently associated with the so-called inflation hedge story. Gold has been almost up by almost 10 percent in the bulk of the month, whereas Bitcoin dropped by 6 percent, moving their 30-day correlation to 0.1. The timing of the movements was equally eye-opening. The local rise of Bitcoin on the 20-21st of October preceded the 5% selloff of gold on the 21-22nd of October by a few days, or to be more precise there was no inverse correlation between them, both of them just ceased the motions.
The division was caused by timing and not opposition.
At the beginning of the month, Bitcoin captured its correction and dropped 17 percent since its local top. Then it has gone stable above the level of 100,000. Meanwhile, Gold hit its peak later and not until traders reversed the extended long positions did it hit its peak. The cycles reversed market expectations. Bitcoin did not rise when gold dropped, it had already bottomed even as the latter was rising. The near-zero correlation can be attributed to that temporal lag and not structural decoupling.
Macro vs. Leverage: Clocks vs. Forces.
Gold was a macro time trade, responding to interest rates and liquidity indicators. Bitcoin, in its turn, followed the crypto-native flows of ETFs, derivatives positions, and leveraged unwinds. Bitcoin data On-chain data indicate that the Bitcoin pain point was reached in the mid. October period and the correction of gold was due to increased commodity profit-taking. Even the tokenized gold products such as XAUT/USDT perpetual at Bybit, tracked the spot prices exactly as well, meaning that there is no load put on the crypto rails.
Implications: Correlation Is Timing and Not Narrative.
To traders who continued to define Bitcoin in the light of digital gold. October was a wake-up that the two have been known to follow different time lines. The volatility of Bitcoin is leverage and positioning, that of gold is liquidity and rate changes in the world. The correlation can once again take hold over quarters, but in the meantime. The crash in Bitcoin preceded the crash in gold- and the only correlation between the two was time.
