This chart compares XAUUSD (Gold, bar), S&P 500 (blue line) and BTCUSD (orange line).
After a well deserved correction, Bitcoin has been used as a low-correlation hedge vehicle for institutional investors, following its securitization in Chicago's trading floor. It is apparent from the given chart that both Gold, which is commonly conceived as a safe haven during bear market, and Bitcoin coincide in their tides until mid 2019.
From late 2019, however, the relationships transform. As institutional investors stock their access hedging balances into cryptocurrencies as safe havens, Bitcoin tends to increase in price along with the equity market. Upon market disruption, however, Bitcoin, which generally has relatively smaller daily trade volume compared to public equities, suffer significant value loss as institutional investors sell-off their hedging vehicle.
From being a low correlation investment instrument, with the entry of institutions, the cryptocurrencies are facing the same correlation-risk as any other instruments available.
None the less, the notable movement in the latest bear market is the correlation between Bitcoin and Gold, where neither of them seem to offer a proper hedge against the beta.
After a well deserved correction, Bitcoin has been used as a low-correlation hedge vehicle for institutional investors, following its securitization in Chicago's trading floor. It is apparent from the given chart that both Gold, which is commonly conceived as a safe haven during bear market, and Bitcoin coincide in their tides until mid 2019.
From late 2019, however, the relationships transform. As institutional investors stock their access hedging balances into cryptocurrencies as safe havens, Bitcoin tends to increase in price along with the equity market. Upon market disruption, however, Bitcoin, which generally has relatively smaller daily trade volume compared to public equities, suffer significant value loss as institutional investors sell-off their hedging vehicle.
From being a low correlation investment instrument, with the entry of institutions, the cryptocurrencies are facing the same correlation-risk as any other instruments available.
None the less, the notable movement in the latest bear market is the correlation between Bitcoin and Gold, where neither of them seem to offer a proper hedge against the beta.