The article discusses the ongoing discussions about the correlation between Bitcoin and other assets such as gold and tech stocks, and whether average investors should pay attention to this narrative.
The author notes that while correlations can come and go, it is important to examine them on a larger timeframe to determine their significance. By analyzing the one-year correlation coefficient between Bitcoin, gold, and the Nasdaq, the author finds that Bitcoin is positively correlated with gold and negatively correlated with tech stocks.
However, when looking at percentage gains, the relationships become less clear. The author emphasizes that banking on any specific correlation as part of a strategy could be risky, as correlations can break at any moment. Ultimately, the article suggests that investors should keep these points in mind and conduct their own research before making investment decisions.
An asset that rises by more than 50,000,000%
Over the past 14-years, Bitcoin has risen against the US dollar by tens of millions of percentage points. There are few asset classes that can boast similar returns. Other assets don’t carry the same degree of volatility either, making a long-standing correlation even less likely.
To date, gold has risen from $800 in early 2009 to $1,945 today, a gain of almost 150%.
The NASDAQ is up more than 10x since early 2009, or returns in excess of 1,000%. Nice gains, but a far cry from the 52,000,000% that Bitcoin returned from July 2010 to present.
Investors would do well to keep this in mind
Ultimately, the article suggests that investors should keep these points in mind and conduct their own research before making investment decisions. The author emphasizes that banking on any specific correlation as part of a strategy could be risky, as correlations can break at any moment.
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.