Bitcoin (BTC) had no positive correlation with traditional inflation hedge gold over the past 60 days, and instead developed a weak positive correlation with the US stock market, a news report from the crypto-focused financial services company BitOoda found.
The correlation between the largest cryptocurrency and the S&P 500 stock index stood at 22% over the past 60 days, according to the report.
The notable correlation has given bitcoin one of the highest market correlations of any cryptoasset. Only ethereum (ETH), dogecoin (DOGE), and vechain (VET) among the top 20 cryptoassets by market cap experienced a slightly higher correlation of 23% each.
Some coins also had a negative correlation with the US stock market, according to the report. Among the top 20 crypto assets, these included Avalanche (AVAX), Algorand (ALGO), and Cosmos (ATOM).
Meanwhile, the report also found that correlations between crypto in general and other assets tend to increase during so-called ‘risk-free’ times, providing little downside protection for an investment portfolio. The “risk-free periods” were identified by looking at the 30 worst days for the S&P 500 over the past two years.
“So the crypto asset class may be less of a hedge than investors expect on days when they need hedging the most,” BitOoda warned.
When it comes to the spot price of gold, the company found that almost all of the top 20 crypto assets had a negative correlation in the past 60 days, with ETH and uniswap (UNI) being the least correlated. . Both coins had a negative correlation with gold of -22%, according to the data.
Bitcoin, often presented as digital gold, had a negative correlation with the price of physical gold by -19% over the past 60 days, according to the report.
The negative correlation is notable given that it occurred during a period of record inflation in the United States.
According to conventional wisdom, durable assets such as gold and bitcoin should protect investors against inflation. However, as noted earlier this year Russ Koesterich, chief investment strategist at a large asset manager Black rock, gold has recently failed as an inflation hedge.
Examining correlations within the crypto market, BitOoda noted in its report that the most correlated coins in the crypto market over the past 60 days were Litecoin (LTC) and Bitcoin Cash (BCH) with a correlation of almost 90%. During the same period, a correlation existed between solana (SOL) and the same shiba inu coin (SHIB), according to the report.
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