The copper-gold ratio has surpassed its 200-day moving average for the first significant time since September 2020, a development that has historically coincided with the early stages of bitcoin. bullish markets.
The ratio currently stands at 0.00142, with copper trading at $6.65 per pound and gold near $4,700 per ounce. Previous increases in the ratio during 2013, 2017, and 2021 aligned with significant gains in bitcoin prices.
The correlation coefficient between bitcoin and the copper-gold ratio currently stands at -0.11, although it has recovered sharply from -1.00. This suggests that the two assets do not yet have a positive correlation, but the relationship is starting to strengthen. Historically, during Bitcoin’s strongest bull runs, the correlation has moved towards or above 1.0.
The current negative reading largely reflects the previous divergence phase, when the ratio was falling and bitcoin typically declined faster than copper. As the relationship recovers, that relationship has historically converged along with improving market conditions.
Historically, the copper-gold ratio has outperformed bitcoin for several weeks or months, suggesting that the current move may still be in its early stages.
The copper-gold ratio is widely considered an indicator of economic momentum and investors’ risk appetite. Copper is closely tied to industrial demand and tends to outperform during periods of economic expansion, while gold is traditionally associated with defensive positioning. Therefore, a rising ratio indicates a higher risk macroeconomic environment.
