According to a new study, investors are increasingly considering bitcoin (BTC) as a safe haven, despite the current bearish trend in the cryptocurrency market.
Digital strategists at Bank of America believe that the rising correlation between bitcoin and gold (XAU) is one of the main indicators of investor confidence in BTC amid the current economic downturn.
In fact, this year, the correlation of bitcoin with gold – generally considered a hedge against inflation – has increased, reaching its annual highs in early October. BofA strategists Alkesh Shah and Andrew Moss said in the study report that the trend of increasing correlation between bitcoin and gold began on September 5. Before that, especially from June 2021, it was still almost zero. It then became negative in March 2022.
“Bitcoin is a fixed supply asset that may eventually become an inflation hedge. “, they wrote. However, they were keen to clarify that the growth of the BTC/XAU correlation is not the only indicator of increasing investor confidence in bitcoin as a store of value.
In fact, bitcoin is more correlated with major stocks like the S&P 500 (SPX) and Nasdaq 100 (QQQ). As proof, BofA strategists reported that the correlation between bitcoin and the SPX and QQQ reached all-time highs on September 13. For the latter:
“The deceleration of bitcoin’s positive correlation with the SPX/QQQ and the increase in its correlation with the XAU indicate that investors may view bitcoin as a relative safe haven, despite continued macro uncertainty and a prolonged market decline. »
BofA strategists have also made a case for mass withdrawals of bitcoins from exchanges to personal or self-hosted wallets. According to the study, weekly withdrawals from BTC exchanges in early October were the largest since mid-June, marking the third consecutive week of withdrawals. Strategists pointed out that the continued mass of outflows directed at personal wallets is a sign of limited short-term selling pressure. They say:
“Investors transfer tokens from exchange wallets to their personal wallets when they intend to HODL, indicating a potential reduction in selling pressure. »
BofA strategists clarified that the methodology used in the study was based on data collected from major bitcoin exchanges such as Binance, Coinbase, Coincheck, FTX, Gemini and Kraken.
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“Blockchain transparency gives us such an insight into the digital asset ecosystem that you can’t get in traditional financial markets,” the analysts said.
It should be noted that this new study was carried out in the context of the growing risks of a global economic recession which led to an increase in demand for this hedge against inflation. Bitcoin lost around 70% of its market value during the 2022 cryptocurrency winter, casting further doubt on its status as an inflation hedge.