Bitcoin (BTC) has exhibited a fluctuating correlation with US equities, raising questions about its role as a global safe-haven asset during periods of financial stress. According to a recent report by RedStone Oracles, shared exclusively with Cointelegraph, Bitcoin’s short-term, seven-day trailing correlation with the S&P 500 index has shown a strong negative correlation. However, the 30-day correlation indicator reveals a “variable correlation,” ranging from -0.2 to 0.4, suggesting that Bitcoin doesn’t consistently serve as a reliable hedge against equity market downturns.
Bitcoin as a Portfolio Diversifier, Not a Hedge
The research suggests that while Bitcoin may not function as a dependable hedge against stock market declines, it holds value as a portfolio diversifier. Marcin Kazmierczak, co-founder and COO of RedStone, emphasized that Bitcoin needs to “mature” before it can decouple from traditional financial markets. Despite this, Bitcoin’s annualized return of over 230% over the past five years significantly outperforms both stocks and traditional safe-haven assets, making it a compelling option for investors seeking higher risk-adjusted returns.
Also Read: Bitcoin Miners Shift to HODLing After 20% BTC Rally – What’s Next for BTC Price?
Declining Volatility: A Sign of Bitcoin’s Maturity?
Bitcoin’s declining volatility is also contributing to its emerging status as a more stable financial asset. On April 30, Bitcoin’s weekly volatility hit a 563-day low, dropping below the realized volatility of the S&P 500 and Nasdaq 100.
This trend, according to Cointelegraph, indicates that investors are beginning to treat Bitcoin as a long-term investment vehicle rather than a speculative asset. As institutional adoption increases, Bitcoin could further solidify its position as a credible asset class, potentially inching closer to becoming a global safe-haven asset in the future.
Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses.
I’m a crypto enthusiast with a background in finance. I’m fascinated by the potential of crypto to disrupt traditional financial systems. I’m always on the lookout for new and innovative projects in the space. I believe that crypto has the potential to create a more equitable and inclusive financial system.
