Bitcoin more of a ‘diversifier’ than safe-haven asset: Report
Bitcoin's correlation with US equities is inconsistent, raising doubts about its status as a safe-haven asset during financial stress. Short-term analysis shows a strong negative correlation, while the 30-day correlation with the S&P 500 varies between -0.2 and 0.4. This variability indicates Bitcoin does not reliably hedge against stock market declines, lacking the necessary strong negative correlation. Despite this, Bitcoin serves as a portfolio diversifier, potentially offering returns when other assets falter. It has not yet achieved the safe-haven status of gold or government bonds. Increased institutional adoption is expected to enhance Bitcoin's maturity and stability. Bitcoin's volatility has decreased, hitting a 563-day low, suggesting it is being viewed more as a long-term investment. An allocation of 1-5% in Bitcoin can significantly improve a portfolio's risk-adjusted returns.
