New research proves that 10 years into its existence, Bitcoin is maturing as a stock market hedge – providing safety from S&P 500 declines. | Source: Shutterstock
More than a decade into its existence, Bitcoin is finally maturing into a full-blown stock market hedge.
That’s the conclusion of new research from crypto prime dealer SFOX, which indicates that Bitcoin and other major cryptocurrencies like Ethereum have developed a negative correlation with the S&P 500. This means that as the stock market bellwether index falls, the prices of the cryptocurrencies rise – and vice versa.
Over the past 30 days, Bitcoin’s correlation with the S&P 500 was -0.402, while Ethereum’s correlation with the stock market index was -0.322. The index’s correlation between Bitcoin Cash, Litecoin, Ethereum Classic, and Bitcoin SV was -0.32, -0.216, -0.267 and -0.223 respectively.
The negative correlation between the S&P 500 and cryptocurrencies had also been observed in May when Bitcoin pierced above $6,000 for the first time in eight months.
Bitcoin to the rescue
According to SFOX, this phenomenon was attributable to the cryptoassets being increasingly viewed as offering a safe-haven in times of global turmoil. While they have not replaced gold as a mainstream hedge, cryptocurrencies were more negatively correlated to the S&P 500 relative to the yellow metal. Gold’s correlation to the stock market index was -0.181.
The trade war between the U.S. and China, which has the potential of slowing economic growth across the world, is one possible catalyst for the growing safe-haven status of crypto, especially Bitcoin:
“Data have suggested for months that investors may be using bitcoin as a hedge against global markets;