Main Points:
- Historical Correlation: Copper has, in the past, moved in tandem with Bitcoin, with strong positive correlations during previous market cycles.
- Current Rally Drivers: Recently, copper prices have surged nearly 12% year-to-date, reaching about US$5.10 per pound—driven primarily by trade tariff uncertainties under President Trump, which have injected risk into both the U.S. and global economies.
- Diverging Influences: Although the rising copper–gold ratio has historically signaled bullish momentum for Bitcoin, caution is warranted as this rally is fueled by external factors not necessarily linked to digital asset fundamentals.
- Broader Economic Impact: In addition to trade policy influences, China’s aggressive stimulus measures—designed to boost domestic consumption amid external uncertainties—are also supporting copper prices, which in turn could have a positive impact on risk assets like Bitcoin.
- Currency Considerations: The Australian dollar, typically sensitive to copper price fluctuations due to Australia’s significant role in copper production and export, remains subdued, underscoring the unique drivers behind this rally.
1. Introduction
Copper, a long-standing economic indicator, is approaching its all-time high. Traditionally, copper has demonstrated a strong correlation with Bitcoin during periods of rapid market expansion, with both assets often sharing bullish momentum. However, the factors driving the current rise in copper prices differ markedly from past cycles.
2. What’s Driving the Copper Rally?
Recent analysis by ING reveals that copper prices on the COMEX have surged approximately 12% year-to-date, reaching around US$5.10 per pound (roughly 760 yen per pound at an exchange rate of 1 USD = 149 JPY). This spike is largely attributed to the uncertainties brought about by President Trump’s aggressive trade tariff policies. Such tariffs have not only increased market volatility but have also elevated risks within both the U.S. and the global economy.
ING analysts note that while copper’s price rise can sometimes hint at renewed bullish sentiment—evidenced by the rising copper–gold ratio—it is crucial to recognize that the current upward movement is driven predominantly by trade policy-induced uncertainty rather than robust economic fundamentals.
3. The Historical Bitcoin–Copper Connection
Experienced cryptocurrency traders recall periods when copper prices and Bitcoin displayed a strong positive correlation. In previous years, bullish signals in the copper–gold ratio have often coincided with significant Bitcoin rallies. Nonetheless, today’s environment is unique. The external pressures from trade tariffs have spurred copper’s rise, and this dynamic might not necessarily translate into a similar surge in Bitcoin prices.
4. The Role of Global Economic Policies
Beyond trade tariffs, other global economic factors are at play. China, the world’s largest importer of primary commodities and a major player in industrial demand, has recently announced some of the most aggressive stimulus measures in decades. These initiatives aim to boost domestic consumption and counteract the uncertainty from U.S. tariffs. Enhanced domestic demand in China is contributing to rising copper prices, and this development could potentially uplift overall risk sentiment in global financial markets—including digital assets like Bitcoin.
5. Currency Dynamics and Market Implications
The relationship between copper and currencies such as the Australian dollar further complicates the picture. Australia, ranked as the world’s 7th largest copper producer and 3rd largest exporter, has traditionally seen the Australian dollar move in close correlation with copper prices. However, the current surge in copper appears to be decoupled from traditional market influences, as evidenced by the relative stagnation in the Australian and U.S. dollar exchange rates. This divergence highlights that the copper rally is primarily being driven by trade policy uncertainty rather than a broad-based increase in demand.
6. Conclusion
In summary, while copper is nearing an all-time high—a move that historically has aligned with bullish trends for Bitcoin—the current drivers behind this rally are largely external. Trade tariff uncertainties under President Trump have spurred copper’s significant rise, but these factors may not be directly relevant to Bitcoin’s underlying fundamentals. Moreover, China’s robust stimulus measures are adding another layer of complexity, potentially supporting overall market risk appetite. As such, while there is potential for Bitcoin to follow copper’s upward trajectory, investors should exercise caution and consider the divergent factors at work.
