The rapid growth of Bitcoin during the US banking crisis has strengthened its long-term support as a safe haven asset.Bitcoin has shown an increasing degree of decoupling from major asset classes in the traditional market
The rapid growth of Bitcoin during the US banking crisis has strengthened its long-term support as a safe haven asset.
- Bitcoin has shown an increasing degree of decoupling from major asset classes in the traditional market.
- As of May 31st, the correlation between Bitcoin and gold has dropped from a historical high to 11%.
In the past few months, Bitcoin, the world's largest cryptocurrency asset by market value, has had an advantage over other major commodity assets in the financial market. According to data from Glassnode, an on chain analysis company, gold coins have outperformed crude oil, gold, and silver in the past three months, with a growth rate of 14.5%.
Although crude oil prices fell by 4% during the same period, there was some positive news in the gold and silver market. This is because precious metals such as gold and silver increased by 7.5% and 12.7% respectively.
Bitcoin becoming a safe haven asset?
The growth of Bitcoin emerged during the US banking crisis, which reinforces the claim that BTC has long been supported as a safe haven asset. Hedged assets refer to assets whose value is expected to remain stable or rise during economic downturns.
This crisis has prompted many investors to sell off bank stocks and transfer funds into the cryptoeconomy, more specifically, Bitcoin.
In recent months, the degree of decoupling between Bitcoin and major asset classes in the traditional market has increased. According to Kaiko, the source of digital asset market statistics, the correlation between Bitcoin and gold has decreased from a multi-year high of 50% in April to 11%.
In addition, since the beginning of 2023, the correlation between virtual currencies and US stocks has significantly decreased. This indicates that Bitcoin is increasingly seen as an independent asset class.
These factors may be at work
One of the key reasons that Bitcoin can be proved to be a legitimate value store is its scarcity. In less than a year, Bitcoin will once again experience a halving event, which will further reduce the rewards paid to miners for producing blocks. This essentially means that Bitcoin is a deflationary asset. In addition, the issuance of coins will decrease over time, leading to significant appreciation in value.
But this is not just a speculative interest in driving the value of Bitcoin. Since the beginning of 2023, its utility has significantly increased, and the Ordinals protocol has paved the way for the creation of irreplaceable tokens (NFTs), coins, and stable coins on the network.
This has sparked the interest of retail investors, as evidenced by the increasing number of addresses holding less than 10BTC. However, the weighted sentiment of tokens remained neutral and did not shift to support any particular market sentiment.
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