During the week of August 22nd, BTC surged by 24%. The market was instantly buzzing: Has the bull market arrived? Many remain skeptical.
First, the conclusion: I believe what follows is not just a bull market, but a major-scale bull market.
Bitcoin's Golden Lineage Fully Awakens
Let's start with something very unusual.
During the same week BTC skyrocketed, Gold rose 5.6%, while the Nasdaq fell 2.1%.
In recent years, people have become accustomed to treating BTC as a high-beta tech stock. When US stocks are risk-on, BTC pumps; when liquidity contracts, BTC usually drops faster.
But this time the path is different. After August 17th, BTC and Gold strengthened simultaneously, while the Nasdaq stayed put.
In fact, since May
The 60-day correlation coefficient between BTC and Gold has soared, reaching a peak of 0.636, approaching the historical high
(0.64 in November 2020, while the long-term median is only 0.12). Meanwhile, the correlation between BTC and Nasdaq has dropped, hitting a low of 0.13 and currently rebounding to 0.22.
How rare is it for this orange line to cross 0.5? Since BTC has had trading records, days meeting this condition account for only 2.2%. Before this round, it only appeared in two historical periods: August 2020 and October 2022.
Looking back, August 2020 was exactly the eve of the main upward wave of the big bull market. At that time, BTC was consolidating around $10,000 - $12,000. A few months later, it broke previous highs and eventually rose to $64,000, a maximum return of +458%.
The October 2022 instance was more turbulent. BTC was bottoming out around $20,000. The FTX collapse black swan occurred in November, smashing the price to $15,700. But looking at the full cycle, October 2022 was already in the long-term bottom zone. From the signal price at that time to the subsequent 73K high, the maximum gain reached +276%.
And now, we are in the third period in history where BTC and Gold are highly correlated. If history rhymes, now could be the starting point of the bull market.
Moreover, there is something very different this time.
In the 2020 round, the median correlation between BTC and Nasdaq was still 0.44. At that time, under a comprehensive QE environment, all assets were pushed up by the same liquidity.
In the 2022 round, the correlation between BTC and Nasdaq was even higher than with Gold, reaching 0.62.
Only this time: the correlation with Gold exceeded 0.6, while the correlation with Nasdaq dropped below 0.25. This combination is a first in history.
If correlation is interpreted as which logic the market is using to price BTC, then among the three high-gold-correlation periods, this one is the purest "anti-devaluation hard asset" pricing structure.
If we look closer at the relationship between the gold correlation coefficient and cycles, we see a recurring phenomenon:
After BTC retraces more than 25% from its peak, the 60-day correlation with Gold rapidly rises from a low to above 0.4
This has occurred four times in history: December 2018, October 2022, September 2024, and June 2026. The first three signals all landed near important bottom zones. If history rhymes again, 57K to 58K is likely the bottom zone for this cycle.
This phenomenon is interesting. Although BTC is dubbed digital gold, historical data shows its long-term median correlation with Nasdaq is 0.45, while with Gold it's only 0.12. Normally, it doesn't look like gold at all, but rather a high-volatility beta tech stock.
So why does BTC experience a surge in gold correlation at the end of every cycle bottom?
My hypothesis: There are two types of capital playing BTC with completely different logic.
One group treats it like a high-risk growth stock for short-term trading. When this capital dominates, BTC moves in lockstep with the Nasdaq.
The other group truly treats it as a long-term hedge against fiat devaluation—the capital that buys into the "digital gold" narrative.
During a price crash, the first group of short-term capital flees fastest. When the price hits the bottom zone and chips gradually concentrate in the hands of the second group of long-term holders, the market's pricing power shifts.
As more buyers use "hard asset" logic to price BTC, the digital gold narrative gets hyped, and the charts show BTC and Gold moving increasingly in sync.
Karma Index Reveals Cycle Position in Early Bull Market
If the gold correlation coefficient observes BTC's current pricing logic from an external macro perspective, then the Karma Index judges whether the washout is sufficient from market sentiment and cycle position.
Karma Index is a cycle indicator developed by CoinKarma. It synthesizes nine dimensions including market liquidity, funding rates, on-chain costs, App rankings, and search popularity into a 0 to 100 market thermometer. Above 80 represents overheating; below 20 represents extreme panic.
As seen in the chart above, before this rise, the Karma Index stayed at low levels for a long time, frequently dropping below 20 into the extreme panic zone, similar to the emotional characteristics of past major bottoms.
Since 2017, a "BTC weekly rise of over 20%" has occurred 27 times; this is the 28th.
For the previous 27 times, if you chased the high after the surge, the median return six months later was only +3.6%. Meanwhile, buying on any random day during the same period yielded a six-month median return of +13.9%. Thus, "chasing a 20% weekly surge" has no historical advantage.
But if you factor in the Karma Index, the situation changes completely: If the average Karma Index 60 days before the rise was below 30, only 8 instances remain. The result is 6 wins and 2 losses, a win rate of 75%, and the median return jumps from +3.6% to +49.4%.
Looking at the Nasdaq, the results are even more interesting.
Among those 8 events, only 3 occurred when the Nasdaq did not rise during the same period, yet BTC still achieved a gain of over 20%:
December 2018: +124.3% six months later.
May 2019: +30.2% six months later.
October 2023: +93.7% six months later.
These three appeared at the bear market bottom, the start of the main upward wave, and the ETF bull market starting line, respectively. All maintained positive returns six months later.
This time, the average Karma Index 60 days before the rise was only 19.5, ranking third lowest among the 9 low-sentiment samples. While BTC skyrocketed, the Nasdaq fell 2.1%.
In other words, this time also fits the structure of "BTC skyrocketing independently from Nasdaq after a long period of low-sentiment washout," becoming the fourth such instance in history.
Putting all the data together, two things can be summarized:
First, the correlation between BTC and Gold has risen to historically rare levels. In the past, such signals appearing after a major retracement almost always landed near important bottoms.
Second, the Karma Index shows the washout this round is quite sufficient. Historically, when the market surges after lingering in low sentiment, subsequent performance is usually much better than simple high-chasing.
One looks at cross-asset pricing, the other at cycle sentiment; both support the claim that we are in the early stages of a bull market.
Many people are afraid of heights now because BTC has been in a bear market for so long that they are anchored.
Especially recently, while US stocks and Gold rose daily, BTC kept falling. After being tossed around for so long, every rebound feels like an escape opportunity, and the faster it rises, the more people fear buying.
But looking at the past two weeks, BTC's relative strength has clearly changed. It is not only stronger than US stocks, but it has also left Gold behind.
The most agonizing part of a bear market is that no one knows how deep the bottom is. Late 2018 is a classic example. Many bought all the way down from $6,000, only for BTC to halve to $3,000. Many broke down and sold everything as soon as they broke even.
Looking back, the most comfortable entry point in that round was actually when BTC suddenly jumped from $3,000+ to $4,000. Although the cost was higher than the absolute bottom, the certainty was much higher because the main upward phase was just beginning.
I believe now is a similar entry point. All historical samples matching "High Gold Correlation + Independent Move from US Stocks + Karma Index Washout" have been the early stages of a bull market's main upward phase.
What Kind of Bull Market Will This Be?
In past BTC bull markets, the fuel mainly came from the halving narrative and US dollar liquidity overflow. "Digital Gold" was mentioned every round, but it mostly stayed at the thematic level and rarely became the main line.
This time, I feel things are different.
Recently, the 30-year US Treasury yield once rose to 5.34%, a new high since 2007. Higher yields mean investors demand higher returns to lend money to the US long-term.
The US is currently carrying nearly $40 trillion in debt. The higher interest rates stay, the heavier the cost of refinancing old debt. Interest expenses continue to drive up the deficit, forcing the government to issue more debt.
These problems have existed for a long time, but what's more noteworthy is that the market is becoming very sensitive to this.
On August 19th, the US Treasury announced it would at least double the liquidity support buyback limit for long-term bonds. After the news, long-term yields fell, and Gold and BTC rose simultaneously. The market quickly interpreted this as the Treasury's willingness to inject liquidity to maintain the bond market.
By September 4th, the direction reversed. US non-farm payrolls increased by 162,000, far higher than the expected 56,000, pushing the probability of a rate hike to 65%. Yields rose, the dollar strengthened, and US stocks, Gold, and BTC were all smashed.
A few months ago, a single non-farm report might not have caused such a market-wide reaction. Now the wind has changed; everyone is staring at the Fed, long-term yields, and liquidity. The market's nerves are taut.
For asset markets, the US debt problem will likely be traded in two ways.
First, rely on AI to grow the pie. Productivity gains, corporate profits, and economic growth outpace debt expansion, naturally lowering the debt-to-GDP ratio.
Second, through monetary expansion and inflation, slowly dilute the real value of the debt. The former corresponds to AI stocks, the latter to Gold and BTC.
In recent years, the market has bet heavily on the first path—the productivity revolution brought by AI. If the market starts shifting more attention back to debt, liquidity, and fiat purchasing power, anti-devaluation trades are likely to return to center stage.
This issue affects everyone holding cash, government bonds, pensions, and fiat assets: How much purchasing power will your money have in ten years? As long as the market doubts whether sovereign debt can expand without continuous currency dilution, capital will naturally seek assets with limited supply that cannot be arbitrarily issued.
Gold is the traditional answer. BTC is becoming the other answer.
Previously, even if institutions agreed BTC was digital gold, they had to deal with exchanges, private keys, custody, compliance, and accounting. The spot ETFs passed in the last round have truly paved this road.
Now, asset management firms, family offices, pension funds, and even general brokerage accounts can directly allocate BTC using familiar financial tools. The narrative has always existed. This round, there is a compliant entry point to handle large amounts of capital.
This is why the synchronization of BTC and Gold this time is more noteworthy than the previous two. Gold correlation has risen to rare highs, while Nasdaq correlation remains low. From an upward logic perspective, this may be the closest BTC has ever been to Gold in history.
If "anti-fiat devaluation" truly upgrades from a recurring theme to the next market main line, the capital pool BTC faces will be entirely different.
If BTC begins to absorb the global hedging demand for currency credit, sovereign debt, and declining purchasing power in asset allocation, that could be the largest influx of capital in BTC's history.
If this macro main line truly unfolds, what we are seeing now is likely just the starting point of a massive bull market.
