Over the past few years, numerous institutions and retail investors have categorized gold and bitcoin in the same asset class—tools to combat inflation and hedge against US dollar depreciation. When gold drops sharply, the market often reprices whether the "hedge narrative" holds true, and bitcoin, as a similar asset, gets sold off together. This is not fundamental correlation, but rather emotional contagion resulting from capital classification.
Over the past few years, numerous institutions and retail investors have categorized gold and bitcoin in the same asset class—tools to combat inflation and hedge against US dollar depreciation. When gold drops sharply, the market often reprices whether the "hedge narrative" holds true, and bitcoin, as a similar asset, gets sold off together. This is not fundamental correlation, but rather emotional contagion resulting from capital classification.