Examining Bitcoin's Correlations: From Big Tech to Commodities and Stocks
Summary:
This article explores the correlations between Bitcoin and various assets, including Big Tech, the US dollar, crypto-related stocks, commodities, equity funds, and bonds. It highlights the findings of different reports and emphasizes the changing nature of these correlations due to Bitcoin's volatility. The article does not provide investment advice.
Bitcoin's correlation with Big Tech and the US dollar is a commonly discussed topic in the financial media.
A report published by the Multidisciplinary Digital Publishing Institute in October 2022 found that the extreme volatility of the Bitcoin market makes long-term correlations stronger than short-term correlations.
During extreme shocks like the COVID-19 pandemic, the positive linkage between Bitcoin and risk assets increases.
Bitcoin can be positively correlated with risk assets and negatively correlated with the US dollar, which means it can serve as a hedge against the dollar.
Some crypto-related stocks, such as MicroStrategy, Riot Platforms, and Coinbase, have remained highly correlated with Bitcoin in the past few months.
These stocks have outperformed Bitcoin this year and are often used as proxies for Bitcoin since it can't be bought through a brokerage account.
The correlation between Bitcoin and silver has been higher than with gold, peaking at 0.26, according to a report by the CFA Institute.
Growth funds tend to have a stronger correlation with cryptocurrencies like Bitcoin compared to value funds. Small-cap growth funds, for example, have a correlation coefficient of 0.41 with Bitcoin.
Bitcoin's correlations with various assets are not set in stone and can change rapidly due to its large price swings.
Investors should conduct their own research and make their own decisions when it comes to investments and trading. This article is not intended to provide investment advice or recommendations.
Published At
8/23/2023 6:25:00 AM
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