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Digital Gold: A Story Still Being Written
Yahoo Financeยท2025-09-10 14:53

Market Performance - Bitcoin experienced a decline of approximately 6.5% in August, marking its first monthly drop since March, despite reaching a new all-time high of $125,000 earlier in the month [1] - Ether, on the other hand, saw a significant increase of nearly 19%, raising its market capitalization share to around 13% [1] - Bitcoin funds faced net outflows, indicating profit-taking, while ether ETFs attracted substantial inflows, resulting in record levels of assets under management [1] Trading Activity - Market activity remained high, with spot trading volumes exceeding the twelve-month average, which is atypical for the summer season [2] - Open interest in bitcoin and ether options reached new highs, with August recording BTC option trading volumes at $145 billion [2] - Implied volatility remained relatively low but increased towards the end of the month, suggesting potential underestimation of risk in the options market [2] Gold vs. Bitcoin - Gold prices surged due to a combination of factors including falling rate expectations, persistent inflation, trade deficits, a weaker dollar, and geopolitical risks [3] - The dismissal of Fed Governor Lisa Cook raised concerns about the Federal Reserve's independence, contributing to gold's price increase [3] - In contrast, bitcoin's price declined on the same day the news about the Fed Governor's dismissal was announced [3] Correlation Analysis - The correlation between bitcoin and gold has been inconsistent, with short-term correlations fluctuating between 12% and 16% over 30- and 90-day periods [4] - Over a longer 180-day horizon, the average correlation is slightly higher but still low, indicating that the two assets do not consistently move together [4] - Since 2024, the average 180-day rolling correlation has increased to around 60%, suggesting that the 'digital gold' narrative may be gaining traction among investors as the asset class matures [4]