Findings by experts have shown that Bitcoin correlation to Gold has significantly heightened by the COVID-19 pandemic.
A published finding by VanEck, a firm with a solid history in the financial market, shows that Bitcoin has a low correlation with the traditional market in the long-term.
Interestingly, during the COVID-19 induced market sell-off, Bitcoin correlation with traditional assets especially gold increased.
As concluded by the finding, the heightened correlation between Bitcoin and other cryptocurrency shows bitcoin’s status as a safe-haven is on the increase.
The findings say “a small bitcoin addition to a 60% equity/40% bond blended portfolio significantly reduced portfolio volatility during the recent market sell-off.”
“While there are no U.S. bitcoin ETFs available today, we believe such products may have significantly reduced volatility for 60% equity/40% bond blended portfolios.”
The analysis also indicates that Bitcoin correlation with traditional assets heightened significantly in the last four weeks compared to the last two weeks finding where the correlation with gold increased to the level that was never seen before.
Between March 13 and 27, bitcoin’s correlation with gold stayed at 0.47, while it stayed at 0.13 with U.S. bonds.
The correlation between Bitcoin and S&P500 stayed at -0.25. For Nasdaq 100 and US real estate, it stayed at -0.18 and -0.12.
The research shows that BTC has no correlation with the emerging market but showed 0.15 correlation with oil.
The findings come less than a month after veteran trader Peter Brandt said gold and Bitcoin are nothing but catastrophic insurance policies.
The trader said Gold and Silver should not be seen as a means of storing value. He concluded that Bitcoin and the mentioned precious metals are more of a catastrophic insurance policy that should not be invested in.
“A premium is paid, hoping the policy is never needed. But if it is needed, the owner is protected against a worst case scenario”, Brandt stated.