A study published by VanEck, a prominent firm with a solid history in the financial market has suggested that in the long term, bitcoin shows a very low correlation with the traditional markets. Experts believe that Bitcoin correlation with gold has heightened amidst the corona crisis.
The VanEck study finds that during the pandemic, Bitcoin's correlation with gold increased during the market meltdown and massive sell-off. They believe that this aids the status of bitcoin as a safe-haven asset with the studies finding that "a small bitcoin addition to a 60% equity/40% bond blended portfolio significantly reduced portfolio volatility during the recent market sell-off".
They went on to add that currently there is no bitcoin ETFs available, however in their view a 60/40% equity -bond blended portfolios would have reduced volatility significantly.
The VanEck study also suggests that while in the first four weeks, bitcoin's correlation snowballed with the traditional market, the scenarios took a backseat in the last two weeks where it shows such heightened relationship with gold which was never witnessed before.
During March 13 and 27, Bitcoin correlation with gold correlated stayed at 0.47, while with the US bonds, it was at 0.13. While its relationship with S&P 500 stayed at a negative of -25. Also, sharing a negative correlation with US real state and Nasdaq.
The findings are interesting, especially in light of the statement made by Peter Brandt, who said bitcoin, gold and silver should not be seen as a means of storing a value. He labelled them as a catastrophic insurance policy that one should shy away from investing.
Bitcoin has long been considered by the community as the one to turn in dire times, and the new study by VanEck adds more substance to these claims.
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