Cryptocurrency
Bitcoin No Longer Looks Like ‘Digital Gold’ by One Measure
As reported by Coindesk, “If ‘digital gold’ means ‘a safe-haven asset where investors park their money during financial market turmoil,’ then bitcoin doesn’t fit the bill as well as it used to. “For most of the year, bitcoin’s price showed a modestly negative correlation with the S&P 500. In other words, the world’s largest cryptocurrency […]
As reported by Coindesk, “If ‘digital gold’ means ‘a safe-haven asset where investors park their money during financial market turmoil,’ then bitcoin doesn’t fit the bill as well as it used to.
“For most of the year, bitcoin’s price showed a modestly negative correlation with the S&P 500. In other words, the world’s largest cryptocurrency by market capitalization tended to rise on days when the bellwether stock-market index fell, and vice versa.
“But since early October, that relationship has weakened, according to information provided by Digital Assets Data.
“The closer to zero or a positive correlation with the stock market that bitcoin gets, the harder it is to paint the digital asset as a port in the storm.
“’The negative correlation has supported the store of value/digital gold thesis for BTC as investors may have been moving into the asset as a hedge against global economic turmoil,’ said Kevin Kaltenbacher, Data Scientist of Digital Assets Data. ‘These recent developments potentially present some challenges to that narrative.’
“A major critic of the co-variance argument, Alex Kruger, a macro cryptocurrency analyst, took to Twitter to offer his sarcastic take, referring to both the stock and foreign exchange markets and their relationship with bitcoin.
“’Now that the ‘Stocks drive bitcoin higher’ meme has been proven wrong once again, this is a good time for the ‘CNH hedging drives bitcoin higher’ meme to make it back to the stage,’ Kruger said…”