Regardless of the continuing cryptocurrency bear market, traders have been more and more Bitcoin (BTC) as a secure haven, a brand new research suggests.
The rise within the correlation between Bitcoin and gold (XAU) is without doubt one of the main indicators demonstrating traders’ confidence in BTC amid the continuing financial downturn, in response to digital strategists on the Financial institution of America.
Bitcoin’s correlation with gold — which is often seen as an inflation hedge — has been on the rise this 12 months, hitting its highest yearly ranges in early October. The rising correlation pattern began on Sept. 5 after remaining near zero from June 2021 and turning damaging in March 2022, BofA strategists Alkesh Shah and Andrew Moss stated within the report.
“Bitcoin is a fixed-supply asset that will ultimately change into an inflation hedge,” the strategists wrote. The expansion in BTC/XAU correlation shouldn’t be the one indicator signaling rising traders’ 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 traders could 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 research, weekly BTC alternate outflows in early October have been the most important since mid-June, marking the third consecutive week of outflows. The strategists emphasised that enormous and steady outflows to private wallets point out restricted near-term promote stress, stating:
“Traders switch tokens from alternate wallets to their private wallets once they intend to HODL, indicating a possible lower in promote stress.”
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’s not obtainable 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 large crypto winter of 2022, triggering extra skepticism over its standing as an inflation hedge.