Copper, a Reliable Economic Indicator, is Nearing Record Highs, Which Could Be Bullish for Bitcoin (BTC)

Seasoned crypto traders may recall periods when bitcoin (BTC) and copper exhibited a strong positive correlation and may quickly draw bullish conclusions from the recent rally in the red metal.

Copper prices are nearing record highs again, a development that seasoned crypto traders may quickly draw bullish conclusions from, especially considering periods when bitcoin (BTC) and copper exhibited a strong positive correlation.

To be precise, copper's year-to-date increase of 12% to $5.10 per pound on COMEX has been driven by President Donald Trump's trade tariffs, which pose risks to both the U.S. and global economies. These aggressive policy moves likely led the Federal Reserve to lower growth forecasts while raising inflation projections this week.

"Copper is up around 12% so far this year, driven mostly by uncertainty over Trump's trade policies. Tariff news is likely to continue to dictate price direction in the months ahead," analysts at ING said in a note to clients on March 18.

However, the latest copper rally is being fueled by factors other than positive cues from global economy, warranting caution while viewing it as a bullish indicator for risk assets, including BTC.

Moreover, BTC's best years have been characterized by a rally in the copper-gold ratio, which is beginning to rise again after a period of decline.

The Aussie dollar-U.S. dollar exchange rate has been moving sideways and down, which is another factor that suggests the ongoing copper rally is not bullish for risk assets.

Australia is the world's 7th largest producer of copper and the 3rd largest exporter of copper. As such, the AUD and copper prices have historically boasted a correlation coefficient of over 0.80. But it's not working this time, probably due to the tariffs-led surge in copper.

Another factor that could be supportive of bitcoin and risk-taking in general is the recent China stimulus. The world's factory is also the largest importer of commodities.

Earlier this week, Beijing announced its most potent plan in decades to boost domestic consumption as it battles external uncertainties posed by Trump's tariffs. The plan noted a direct link between consumption, affordable childcare and the country’s long-running property crisis.

"The policy package includes efforts to increase household income, spur spending, and support population growth. Fresh data was also released for the first two months of the year showing Chinese consumption, investment and industrial production exceeding estimates," ING analysts said.