Despite the ongoing cryptocurrency bear market, investors are increasingly turning to Bitcoin (Bitcoin) as a safe haven, new research suggests.
Bank of America Digital Strategists Say Rising Correlation Between Bitcoin and Gold (XAU) Is a Key Indicator of Investor Confidence in Bitcoin Amidst the Ongoing Recession is one of
Commonly viewed as an inflation hedge, Bitcoin’s correlation with gold has risen this year. Record high level for the year Early October. BofA strategists Alkesh Shah and Andrew Moss said in a report that the correlation trend has remained near zero since June 2021, turned negative in March 2022, and began a rising trend on September 5. said.
“Bitcoin is a fixed supply asset that could end up being an inflation hedge,” the strategist wrote. However, the growth of the BTC/XAU correlation is not the only indicator that investors trust Bitcoin as a store of value.
Bitcoin is also increasingly correlated with major stocks such as the S&P 500 (SPX) and the Nasdaq 100 (QQQ). Correlations between Bitcoin and both his SPX and QQQ reached all-time highs on Sept. 13, the BofA strategist wrote, adding:
“The deceleration in the positive correlation with SPX/QQQ and the rapid rise in the correlation with XAU suggest that investors will continue to invest in bitcoin as macro uncertainty persists and a market bottom is not in sight. indicate that it may be viewed as a relatively safe haven.”
BofA strategists also noted massive Bitcoin outflows from exchanges to personal or self-hosted wallets. According to the study, the weekly BTC exchange outflow in early October was the largest since mid-June and the third consecutive week of outflows. The strategist emphasized that the large and sustained outflows to personal wallets indicate limited short-term selling pressure, stating:
“Investors are transferring tokens from exchange wallets to personal wallets when they intend to HODL, which indicates a potential drop in selling pressure.”
BofA strategists said the report methodology includes data from major Bitcoin exchanges such as Binance, Coinbase, Coincheck, FTX, Gemini and Kraken.
“Blockchain transparency provides insight into the digital asset ecosystem not available in traditional financial markets,” said the analyst.
The new report comes out amid heightened risks of a global recession, boosting demand for inflation hedging. Bitcoin lost about 70% of its market value in the big crypto winter of 2022. cause more skepticism Over its status as an inflation hedge.