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Regardless of the continuing cryptocurrency bear market, buyers have been more and more taking a look at Bitcoin (BTC) as a secure haven, a brand new research suggests.
The rise in correlation between Bitcoin and gold (XAU) is certainly one of main indicators demonstrating buyers’ confidence in BTC amid the continuing financial downturn, in accordance with digital strategists on the Financial institution of America.
Bitcoin’s correlation with gold — which is often considered as an inflation hedge — has been on the rise this yr, hitting its highest yearly levels in early October. The rising correlation development began on Sept. 5 after remaining near zero from June 2021 and turning unfavorable in March 2022, BofA strategists Alkesh Shah and Andrew Moss mentioned within the report.
“Bitcoin is a fixed-supply asset that will ultimately develop into an inflation hedge,” the strategists wrote. The expansion in BTC/XAU correlation is just not the one indicator signaling rising buyers’ 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 buyers might view Bitcoin as a relative secure haven as macro uncertainty continues and a market backside stays to be seen.”
BofA strategists additionally talked about large Bitcoin outflows from exchanges to non-public or self-hosted wallets. In line with the research, weekly BTC trade outflows in early October have been the biggest since mid-June, marking the third consecutive week of outflows. The strategists emphasised that giant and steady outflows to non-public wallets point out restricted near-term promote strain, stating:
“Traders switch tokens from trade wallets to their private wallets after they intend to HODL, indicating a possible lower in promote strain.”
The BofA strategists talked about that the report’s methodology included information 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 is not accessible in conventional monetary markets,” the analysts acknowledged.
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 huge crypto winter of 2022, triggering more skepticism over its standing as an inflation hedge.
