BofA Names BTC a Safe Haven Assets Citing Changing Correlation to Gold

The movement of the largest cryptocurrency by trading volume Bitcoin (BTC) in comparison to other traditional assets gives investors the inclination that the coin might just be a safe haven asset.

According to research conducted by the Bank of America (BofA), this suggestion takes into consideration that the digital currency has recently traded as a risk asset at a stretch.

These strategists from BofA identified as Alkesh Shah and Andrew Moss are drawing some bullish conclusions from recent happenings around BTC in comparison with gold. Based on a 40-day analysis, bitcoin has a correlation of 0.5 with gold and this was around 0 in mid-August. Therefore, this displays an increasing trend in the correlation between BTC and gold.

However, Shah and Moss discovered that while the bitcoin-gold correlation increases, in correlation to other major indexes, there has been stagnation, especially with S&P 500 and Nasdaq 100 flattened out below record highs. For S&P 500, the figure has remained at 0.69 while Nasdaq stood at 0.72. The strategist is optimistic as they see this trend as a silver lining in the sky.

“A decelerating positive correlation with SPX/QQQ and a rapidly rising correlation with XAU indicate that investors may view Bitcoin as a relative safe haven as macro uncertainty continues and a market bottom remains to be seen,” the strategists wrote

Crypto Players foresee a Possibility

Galaxy Digital Chief Executive Officer Mike Novogratz made a similar insinuation about bitcoin during the C4K Investors Conference on 20 October.

Specifically speaking, Novogratz referred to the leading digital currency as the “canary in the coal mine.” Eventually, investors will likely perceive BTC as an alternative investment to gold seeing their high correlation. 

Also, Kaiko Research reported earlier this month that Bitcoin and gold correlation was at its yearly high based on the macro trend studies conducted by the firm.

Markedly, the strengthening of the United States Dollar against other fiat currencies, such as the Pound and Euro, and the repeated interest rate hikes by the U.S Federal Reserve were identified as the reasons for the increase in correlation, among other factors.