Regardless of the continued cryptocurrency bear market, buyers have been more and more Bitcoin (BTC) as a secure haven, a brand new examine suggests.
The rise in correlation between Bitcoin and gold (XAU) is one among main indicators demonstrating buyers’ confidence in BTC amid the continued financial downturn, in keeping with digital strategists on the Financial institution of America.
Bitcoin’s correlation with gold — which is usually seen as an inflation hedge — has been on the rise this yr, hitting its highest yearly ranges in early October. The rising correlation development began on Sept. 5 after remaining near zero from June 2021 and turning unfavorable in March 2022, BofA strategists Alkesh Shah and Andrew Moss stated within the report.
“Bitcoin is a fixed-supply asset that will finally turn into an inflation hedge,” the strategists wrote. The expansion in BTC/XAU correlation just isn’t the one indicator signaling rising buyers’ confidence in Bitcoin as a retailer of worth although.
Bitcoin has additionally been more and more correlated with main shares just like the S&P 500 (SPX) and Nasdaq 100 (QQQ). The correlation between Bitcoin and each SPX and QQQ reached all-time highs on Sept. 13, the BofA strategists wrote, including:
“A decelerating optimistic correlation with SPX/QQQ and a quickly rising correlation with XAU point out that buyers might view Bitcoin as a relative secure haven as macro uncertainty continues and a market backside stays to be seen.”
BofA strategists additionally talked about huge Bitcoin outflows from exchanges to private or self-hosted wallets. In accordance with the examine, weekly BTC alternate outflows in early October had been the most important since mid-June, marking the third consecutive week of outflows. The strategists emphasised that giant and steady outflows to private wallets point out restricted near-term promote strain, stating:
“Buyers switch tokens from alternate wallets to their private wallets after they intend to HODL, indicating a possible lower in promote strain.”
The BofA strategists talked about that the report’s methodology included knowledge from main Bitcoin exchanges, together with Binance, Coinbase, Coincheck, FTX, Gemini, Kraken and others.
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“The blockchain’s transparency provides us perception into the digital asset ecosystem that is not accessible in conventional monetary markets,” the analysts said.
The brand new report comes amid the rising dangers of the worldwide financial recession, driving extra demand for the inflation hedge. Bitcoin has misplaced about 70% of its market worth amid the huge crypto winter of 2022, triggering extra skepticism over its standing as an inflation hedge.
