The copper-to-gold ratio rose above its 200-day moving average for the first time since September 2020, a move that historically coincides with the early stages of a Bitcoin bull market.
The ratio is currently 0.00142, with copper trading at $6.65 per pound and gold trading near $4,700 per ounce. Previous spikes in this ratio in 2013, 2017, and 2021 coincided with significant increases in Bitcoin prices.
The correlation coefficient between Bitcoin and the copper-to-gold ratio currently stands at -0.11, but has rebounded sharply from -1.00. This suggests that although the two assets are not yet positively correlated, the relationship is starting to strengthen. Historically, during the strongest Bitcoin bull markets, the correlation has been close to 1.0 or higher.
The current negative numbers largely reflect an earlier divergence phase where the ratio was declining and Bitcoin typically fell faster than copper. As this ratio recovers, the relationship has historically converged with improving market conditions.
Historically, the copper-to-gold ratio has led Bitcoin for weeks to months, suggesting that the current move may still be in its early stages.
The copper-to-gold ratio is widely viewed as a measure 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 a defensive position. Therefore, an increase in the ratio indicates that the macro environment is more risk-on.
