With gold and other precious metals surging not just this year but over the past three years, we have received a growing number of questions about what is driving the rally.

One important question to answer first is, who owns bitcoin and gold? The ownership classifications are not entirely analogous between the two assets, and piecing together bitcoin ownership requires stitching together various datasets, often with differing numbers.

Key takeaways from comparing owners of gold and bitcoin: bitcoin is underowned by central banks/governments, bitcoin overindexes on ETFs, corporations are not present in gold ownership, and gold and bitcoin miner behavior is completely different.

Because bitcoin is hard to value, and it produces no cash flow, earnings, or dividends to discount, one common analysis is to compare its size to gold. While there are both cyclical and secular components to the growth of bitcoin, its share of the total value of gold continues to grow.

Comparing the AUM of U.S. BTC ETFs to U.S. gold ETFs, we find a similar trend – bitcoin ETFs continue to gain ground on gold ETFs, although this year gold ETFs have outpaced bitcoin ETFs in fund flows as well as price appreciation.

Looking at the correlation between the price of bitcoin and gold, we find essentially no correlation between the two. Unlike bitcoin’s correlations with U.S. equities, which had a structural shift upward following the COVID-19-induced economic crisis, bitcoin’s relationship with gold hasn’t changed over time.

Since 2013, macroeconomic factors, such as the U.S. dollar index, inflation, interest rates, and money supply have played important roles for both bitcoin and gold. Gold’s relationships with these factors can be classified as structural and persistent.

Bitcoin’s relationships, however, show changes over time, maturing from what were historically idiosyncratic factors to ones that are more systematic in nature. As bitcoin has been more readily adopted into the traditional financial market ecosystem, its linkages with macroeconomic variables, such as global liquidity and real yields, have increased.

Summarizing the analysis, the U.S. Dollar Index is inversely correlated with gold and bitcoin, inflation is not highly correlated with either gold or bitcoin, real interest rates are highly inversely correlated to gold and increasingly inversely correlated with bitcoin, and liquidity (global M2) is correlated with gold and bitcoin. If we were to think about each asset from a macro factor perspective, it is that gold serves as a real-rate hedge, whereas bitcoin has evolved into a liquidity barometer.