Cryptocurrency Analyst Issues Alert: Bitcoin Not Yet Prepared to Dethrone Gold or Bonds as Leading Investment, States US Crypto Report
Morning Vibes: Unraveling Bitcoin's Role in Finance
Crack open a can of coffee as we wade through Bitcoin's budding role in mainstream finance. With whispers of Bitcoin detaching from traditional equity markets, is it ready for its grand debut?
Crypto Gossip of the Moment: Bitcoin Still a Varied Investment, Not a Dependable Shelter, Says RedStone Exec
In our recent US Crypto Chit-chat series, we ruminated on whether Bitcoin's 'digital gold' narrative was faltering as Gold hit new peaks while Bitcoin trailed behind.
The tightrope walk began when advocates hinted at Bitcoin as a safe haven asset, a beacon to stave off negative market price fluctuations.
"It seems Bitcoin is primarily a digital store of value," the US Treasury recently mentioned.
But is it now time for the big reveal? We chatted with RedStone to ask: Is Bitcoin a hedge for traditional markets?
Their response was illuminating, with insights from Marcin Kazmierczak, co-founder and COO of RedStone. In a nutshell, the data supports Bitcoin's potential as a portfolio diversity magnet.
Kazmierczak drew upon analysis of Bitcoin and S&P 500 data stretching back a year. They examined periodical shifts on a weekly and monthly basis.
For the 7-day correlation, a short-term observation, they highlighted periods when Bitcoin and American stock markets displayed strong opposing liaisons.
"These were the times many cried out for Bitcoin to break free from the broader markets," he clarified.
Nevertheless, the 7-day correlation is fragile, susceptible to market news and noise. The 30-day chart supplies a clearer picture.
It reveals flickers of positive, nearly negligible, and sluggish negative correlations throughout the year.
Is Bitcoin Hankering for Traditional Hedges?
Kazmierczak pointed out that Bitcoin's relationship with the S&P 500 has fluctuated significantly over the past 12 months.
The variance, he said, fails to support positioning Bitcoin as a successor to traditional hedges like gold or bonds.
"With correlations hovering between -0.2 and 0.4, Bitcoin is a variable companion for equities, not a dependable counter-movement shelter," Kazmierczak shared in the chat.
He noted that institutional stakeholders still primarily view Bitcoin as a risk-on asset. This range signifies that Bitcoin imparts periodic freedom from traditional equity markets, yet not consistently enough to provide reliable counter-movement protection.
He believes the link is feeble enough to offer portfolio diversification benefits but falls short of providing consistent protection against stock market crashes.
"This connection places Bitcoin in the diversifier category, not the haven asset bracket...While Bitcoin can liven up a portfolio, it doesn't necessarily guard against stock market slides since it doesn't persistently move contrary to traditional equities," he summarized.
That being said, Kazmierczak acknowledges that if Bitcoin transforms into a widely accepted safe-haven, risk-off asset, it would spell an epochal shift in modern financial history.
"Such a transformation could very well occur, but it's safe to say that it's not instant pizza," Kazmierczak concluded.
Graph of the Day
The chart suggests that Bitcoin's path has sometimes diverged from traditional equity markets, particularly in 2024-2025.
This divergence, however, does not guarantee permanent detachment or consistent negative correlation with equities.
Though Bitcoin occasionally topped equities, it still exhibits periods of correlation, casting uncertainty on its portfolio protection potential.
Recent US Crypto Dish revealed potential context for these variances. BeInCrypto noted political tension and apprehension over the Federal Reserve's (Fed) autonomy[2].
Bytes for Thought
Here's a quick rundown of more US crypto tidbits on tap:
- Earn up to 10,000 USDT with YouHodler [1]
- The US Senate's PSI wades into President Trump's digital ventures questioning ethics and conflicts of interest[2]
- Pectra hard fork locks onto mainnet at 10:05 UTC, completed 12 minutes later[2]. This is Ethereum's most significant change since the 2022 Merge.
- Bitcoin soared above $97,000 following China's $138 billion stimulus, then retreated to $96,000 amid Fed uncertainty[2]
- Changpeng Zhao (CZ) plans to lower Binance Smart Chain (BSC) gas fees by up to 10x to improve user experience and lower costs[2]
- Bitcoin ETFs experienced outflows of $85.64 million, snapping a streak of inflows as institutional investors adjust their exposure ahead of the FOMC[2]
- Movement Labs shuffles co-founder Rushi Manche amid a third-party investigation into market maker issues, inciting community uproar[2]
- World Liberty Financial prepares for a governance vote to approve a USD1 stablecoin airdrop, with near-unanimous voter support hinting at a fast rollout[2]
- Litecoin (LTC) scooted up 10% despite the SEC delay on the Litecoin ETF, trading at $91.68 with brisk daily volume[2]
- Solana Name Service launches its SNS token, aligning incentives with .sol domain user needs and future ecosystem development[2]
Stock Swaps Pre-Market Recap
- TonTrader
- dYdX
- Arkham
- BingX
- HTX
- TonTrader
- dYdX
- Arkham
- BingX
- HTX
Fine Print
To adhere to the Trust Project guidelines, BeInCrypto strives for neutral, unbiased reporting. This news article endeavors to provide accurate, current information. However, we urge readers to verify details independently and consult with professionals before making decisions based on this content. In compliance with our Terms of Service, Privacy Policy, and Disclaimer, we have streamlined our guidelines.
Morning Vibes: Analyzing Bitcoin's Role in Finance Continues
- Despite recent suggestions, Bitcoin's('digital gold') separation from traditional equity markets remains questionable.
- In a recent discussion, RedStone executives ruled out Bitcoin('safe haven asset') as a dependable shelter during market crashes.
- Bitcoin('portfolio diversity magnet') showed periodic shifts in correlation with the S&P 500 over the past year, but failed to consistently counter market movements.
- Lower institutional stakeholders still view Bitcoin as a risk-on asset, limiting its potential as a traditional hedge.
- Bitcoin's variances in correlation with the S&P 500 don't support its position as a successor to traditional hedges like gold or bonds.
- The US Senate's PSI is investigating President Trump's digital ventures, raising questions about ethics and conflicts of interest.
- The Ethereum-based Pectra hard fork has completed, marking significant changes since the 2022 Merge.
- Bitcoin soared above $97,000 following China's stimulus, but retreated due to Fed uncertainty.
- Binance Smart Chain is planning to lower gas fees by up to 10x to improve user experience and reduce costs.
- Bitcoin ETFs experienced outflows due to institutional investors adjusting their exposure ahead of the FOMC.
- World Liberty Financial is preparing for a governance vote to approve a USD1 stablecoin airdrop, hinting at a fast rollout. Cross-chain governance, token distribution, and decentralized finance (DeFi) are key elements shaping the broader finance landscape today.
