In brief

  • Bitcoin shares more with copper due to both assets' volatility, according to Goldman Sachs' chief of commodities.
  • The leading cryptocurrency's correlation with gold has also fallen off recently.

Despite the popularity of Bitcoin’s “digital gold” narrative, cryptocurrencies share more with a much different kind of metal, argued Jeff Currie, the head of commodities at Goldman Sachs.

"Digital currencies [are] not substitutes to gold. If anything, they may be a substitute to copper. And the reason I argue that is they're pro-risk, they're risk-on assets,” Currie said during an interview with CNBC yesterday.


The terms “risk-on” and “risk-off” refer to various economic environments and the corresponding investment strategies employed by traders. In a risk-on environment, the outlook is usually positive, markets are in an uptrend, and corporate earnings are surging. 

This prompts traders to get involved with more risky assets in an attempt to earn more profits. Stocks are a prime example of a risk-on asset.

However, when there is an economic downturn, traders tend to dump their risk-on assets in favor of safer risk-off investments, which are better suited for preserving their capital. Cash and gold are examples of this style of investment.

In other words, when everything is good and growing, investors take more risks by betting on riskier assets, and when the market is seeing red, traders flee to more stable assets.

As for the precious metals comparison, copper is often considered a “third-rate” metal throughout its history compared to gold and silver. However, the metal’s lower price—gold and silver cost roughly 475 times and 7 times more than copper, respectively—and larger supply make copper a much more volatile asset.


"[Bitcoin’s] demand is through payment systems. It's going to be correlated to the business cycle. So, when we look at the substitute, if anything, we would argue that Bitcoin substitutes against risk-on inflation hedges, not risk-off inflation hedges,” Currie explained.

Bitcoin and gold de-correlate

A report published by institutional digital assets data provider Kaiko Research on Monday also corroborates Currie’s remarks. 

According to the researchers, the correlation between Bitcoin and gold has recently plunged to its lowest point since 2018.

“We can now observe a pre-pandemic trend between equities and gold setting in. Today, Bitcoin’s correlation with both asset classes is either negative or weak,” Kaiko Research concluded.

A chart comparing correlations with various financial markets.
Correlation between the Nasdaq, S&P 500, Gold, and Bitcoin. Source: Kaiko

While Bitcoin is often compared to gold based on their qualities as stores of value, the market crash in 2020 made their correlation as strong as ever. 

Nevertheless, as markets recover and the pandemic slowly concludes, Bitcoin and gold are gradually parting ways.

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