Bitcoin's Correlation To Risk Assets

While many bitcoin investors look for the asset to behave as a safe haven, bitcoin typically has ultimately acted as the riskiest of all risk allocations.

A large part of the crypto narrative has been about them being some kind of hedge against traditional assets, and especially the depreciation of fiat currencies.

As more TradFi corps have entered the crypto market, their own metrics for allocating resources have classed Bitcoin, and others, as some of the riskiest of assets.

Bitcoin has ultimately acted as the riskiest of all risk allocations and as a liquidity sponge, performing well at any hints of expanding liquidity coming back into the market. It reverses with the slightest sign of rising equities volatility in this current market regime.

So, not a hedge - not yet.

We do expect this dynamic to substantially change over time as the understanding and adoption of Bitcoin accelerates. This adoption is what we view as the asymmetric upside to how bitcoin trades today versus how it will trade 5-10 years from now. Until then, bitcoin’s risk-on correlations remain the dominant market force in the short-term and are key to understanding its potential trajectory over the next few months.