Bitcoin: Risk-asset more than a safe-asset?

Bitcoin recent fall to $7,915.65 on March 9, 2020 had many in the ecosystem commenting on the asset.

Speculations were rife regarding the coin’s ‘safe-haven‘ narrative. Economist Nouriel Roubini is the latest one to comment on the issue. In a recent tweet, he stated that Bitcoin[BTC] was clearly turning out to be a risk-asset with its price plunging by more than 10 percent in a day.

In the meanwhile Bitcoin is down 8% in the last day, much more than global equities. Another proof that Bitcoin is NOT a good hedge vs risky assets in risk-off episodes. It actually falls more than risky assets during risk-off. So BTC is a shitty shitcoin hedge in risk-off cases — Nouriel Roubini (@Nouriel) March 9, 2020

Bitcoin as been long touted as an uncorrelated asset with other macro asset classes such as equities, fixed income, gold, and oil. This attribute also lent credence to its ‘store-of-value’ narrative. However, recent developments paint a different picture. Bitcoin has been falling along with other traditional assets like SPX, Gold, Dow Jones, and Crude oil.

Correlation between Bitcoin and gold jumped to a massive 14-month high recently owing to the tensions regarding Covid-19, and this, in turn, raised questions about both assets’ “safe-haven” claims.

According to data from skew markets, the 1-month correlation between Bitcoin and Gold is now at +39.6 percent, an increase of over 200 percent since the beginning of the year when the correlation was as low as -37 percent, according to the scale.

From June to September of last year, the correlation between the two jumped from -40 percent to +37.6 percent. Industry sentiments around the risk-on or safe-haven claim of the two assets have varied lately.  Mati Greenspan, Founder of Quantum Economics, in a letter to investors stated that this variation was all about context.