Bitcoin BTC$113,324.85 has long been described as “digital gold”, and, like the precious metal, is often pitched as a hedge against inflation. But new data from NYDIG suggests that the narrative doesn’t hold up.

In its weekly digest, NYDIG’s Global Head of Research Greg Cipolaro found that inflation isn’t a reliable factor driving bitcoin’s price. Monthly correlation data shows that bitcoin’s relationship to inflation is both inconsistent and weak.

“We know the community likes to pitch bitcoin as an inflation hedge, but unfortunately, here, the data is just not strongly supportive of that argument,” Cipolaro wrote. “The correlations with inflationary measures are neither consistent nor are they extremely high.”

Gold, the traditional inflation hedge, doesn’t fare much better. Its correlations with inflation have often been negative and fluctuate from one period to the next.

This challenges the conventional view that rising inflation automatically boosts gold prices, with Cipolaro himself writing that it’s surprising that for gold, inflationary measures are inversely correlated.

So what moves bitcoin and gold? Real interest rates and money supply.

For gold, falling real interest rates, those adjusted for inflation, have long signaled price gains. Bitcoin, although relatively new to financial markets, is now exhibiting a similar pattern.

Cipolano found bitcoin’s inverse relationship with real rates has strengthened in recent years, likely a result of its growing integration into the broader financial system.

The takeaway, according to NYDIG: investors should stop thinking of bitcoin as an inflation hedge.

Instead, it behaves more like a measure of global liquidity, moving in response to interest rates and the flow of capital, not the cost of groceries or gasoline.

“If we were to summarize how 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,” Cipolaro concluded.