Copper’s Surge: What It Really Means for Bitcoin and Risk Assets
Copper is once again in the spotlight, inching toward record highs and sparking renewed interest among cryptocurrency investors. For seasoned traders, the red metal’s rally may stir memories of its past correlations with Bitcoin (BTC), fueling optimism that risk assets could follow suit. But while copper and Bitcoin have historically moved in tandem at times, relying too heavily on that relationship—especially now—warrants caution.
This year’s copper rally isn’t being driven by the usual suspects like robust industrial demand or global economic expansion. Instead, it’s rooted in a complex mix of geopolitical and macroeconomic tensions, with trade tariffs introduced by former President Donald Trump playing a significant role. According to ING analysts, copper has climbed over 12% year-to-date, currently hovering around $5.10 per pound on the COMEX.
Yet beneath the surface, the story is far less straightforward.
Rather than signaling strong global growth, copper’s surge reflects market anxiety. The looming threat of protectionist trade policies has prompted the Federal Reserve to revise down its growth projections while raising inflation expectations. “Copper is up around 12% so far this year, driven mostly by uncertainty over Trump’s trade policies,” ING noted in a recent update—highlighting that political fear, not economic optimism, is at the core of the price rally.
Another wrinkle lies in the traditional link between copper prices and the Australian dollar (AUD). Australia, one of the world’s top copper producers, has typically seen its currency rise in tandem with copper, with a historical correlation coefficient above 0.80. However, that relationship appears to be breaking down, as the AUD has remained flat amid copper’s ascent—yet another sign that this rally defies conventional economic patterns.
Meanwhile, in the East, China has unveiled its most ambitious domestic stimulus package in decades. Aimed at boosting household income and revitalizing consumer spending, Beijing’s efforts are designed to cushion the economy from external pressures like U.S. tariffs. As the world’s largest importer of raw materials, China’s stimulus has broad implications for commodities like copper—and by extension, sentiment around risk assets such as Bitcoin.
“Copper’s price rise reflects broader economic conditions shaped by policies that may also positively impact Bitcoin, as investors seek exposure to alternative assets,” ING analysts observed.
Still, correlation is not causation.
While China’s domestic rebound may boost commodity demand, and some capital could trickle into Bitcoin as part of a broader “risk-on” shift, that doesn’t mean Bitcoin is poised to track copper’s every move. The motivations behind each asset’s momentum are distinct, and the forces currently lifting copper—namely trade policy risk and geopolitical volatility—may not be the same tailwinds crypto investors are counting on.
Bitcoin has historically been known to decouple from traditional asset classes, often forging its own path in response to shifts in monetary policy, technological adoption, or regulatory developments. In times of economic upheaval, Bitcoin is increasingly viewed not just as a speculative asset, but as a hedge against fiat instability—a digital safe haven, untethered from nation-state politics.
Conclusion: Don’t Confuse Noise with Signal
Copper’s rally paints a complex picture. On the surface, it may hint at improving conditions for risk assets. But a deeper look reveals that political tensions, distorted currency correlations, and stimulus-driven uncertainty are what’s really pushing prices higher.
For Bitcoin, the implications are mixed. While the environment may be broadly supportive of alternative assets, its trajectory remains governed by a different set of forces. Traders and investors should resist the temptation to draw clean lines between these two very different markets.
In a global economy grappling with change, Bitcoin’s resilience may ultimately matter more than any temporary correlation. As ever, it pays to watch the bigger picture.