Bitcoin, the Haven Crypto Bulls Hoped for, Is More a Barometer of Risk: Godbole
Bitcoin, often seen as the digital equivalent of gold by crypto enthusiasts, is increasingly being viewed as a risk indicator rather than a safe haven asset. This shift in perception aligns with the analysis provided by Godbole, suggesting that Bitcoin has evolved into a reflection of speculative market sentiment.
Interestingly, Bitcoin's correlation with the Australian dollar-yen rate has strengthened recently, reinforcing its role as a risk barometer amid the escalating U.S.-China trade tensions. Moreover, its negative correlation with gold now stands at -0.80, indicating that their price movements tend to be inversely related.
The ongoing trade war initiated by President Donald Trump has injected heightened volatility into global financial markets since March. Consequently, investors are seeking refuge in assets perceived to offer protection during these uncertain times.
In a notable reversal of trends, Bitcoin's correlation with gold turned negative in late February and has continued to decrease to -0.80, just shy of the maximum inverse correlation value of -1. This data suggests that while Bitcoin remains intertwined with gold in terms of price movements, they generally move in opposite directions.
Bitcoin, the Haven Crypto Bulls Hoped for, Is More a Barometer of Risk: Godbole
Bitcoin, rather than behaving as a digital gold, has solidified as a proxy for risk, validating FX market participants who track it as a gauge of speculative sentiment.
- Bitcoin, with a strong positive correlation to the Aussie dollar-yen rate, is becoming even more of a barometer of risk as the U.S.-China trade war progresses.
- The correlation with gold now stands at -0.80, indicating the two tend to move in opposite directions.
In essence, Bitcoin is emerging not only as a digital asset but also as a risk indicator in financial markets.
In contrast, bitcoin's 90-day correlation with gold flipped negative in late February and has since dropped to -0.80, just above the minimum -1. It means the two are closely related in their movements, but in opposite directions.
