BofA: Investors View Bitcoin As Safe Haven Due To Correlation with Gold.
Despite the economic uncertainty affecting many countries throughout the world, Bank of America Securities market strategists explained in a note this week that bitcoin has been correlated with gold.
Bitcoin as a Safe-Haven
Alkesh Shah and Andrew Moss, analysts at Bank of America noted, “that investors may view bitcoin as a relative safe haven as macro uncertainty continues.” Bitcoin and gold have recently been highly correlated, according to both analysts.
Bitcoin’s volatility has been lower than those of the Nasdaq and S&P 500, according to a recent report by crypto data provider Kaiko.
The Bank of America strategists believe bitcoin’s price fluctuations, compared to other global assets, have caused investors to consider bitcoin a safe-haven.
“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,” wrote Alkesh Shah and Andrew Moss.
According to the latest reports, both bitcoin (BTC) and gold prices have been range bound on Monday, October 24. In comparison with equity markets, they were less volatile on that day.
The price of BTC per unit is just above $19K, while the nominal price of gold is currently 1,646.70 US dollars per ounce of .999.
The 40-day correlation between gold and the stock market has been monitored by Shah and Moss at Bank of America, which is currently at 0.50.
The 0.50 rating is much closer and has a much stronger correlation with the precious metal than the zero rating BTC recorded in August.
During times of macroeconomic uncertainty, analysts are warning that rate hikes by the US Federal Reserve could cause a crisis of US Treasuries liquidity.
The Fed is expected to raise rates aggressively next month, but strategists believe the central bank will pivot by the end of the year.