Digital Gold or Fool’s Gold: Is Crypto Really a Hedge against Equity Risk?

Enterprising Investor2022-07-13

Crypto enthusiasts often claim that digital coins and tokens are uncorrelated with equities and can provide a safe haven amid stock market crashes. The assumption is that cryptoassets will act like “...

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Comments

Desmond669
2022-07-13
Desmond669
Qqq
HCH88
2022-07-13
HCH88
[Like]
haircut
2022-07-13
haircut
Only invest with you surplus
JC888
2022-07-13
JC888
Concept of crypto is noble, borderless currency. It should not be pegged against any currency but stands on its own ground with its inherent processing logic. Unfortunately it's usage has morphed into a speculative tool favoured by the younger generation as a get rich quick scam.As a result of pegging against Fiat currency this is what happens when fear sets in and the faster runners flee, leavg the slow reaction individuals caught in a rut.Hey it comes with the territory if u go against the flow and speculate on crypto n choose to live on the edge. Just wish people invest in crypto with the notion that if they lose everything they will still be OK.
Vincent1968
2022-07-13
Vincent1968
Okie
ThinkOrSwim
2022-07-13
ThinkOrSwim
If u want to buy bits and bytes as an investment, go buy a hard disk.

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On the other hand, true to its hedge-y reputation, gold exhibited a negative correlation with the benchmark index in four out of the last five crashes.But what about bitcoin and gold? How has that relationship changed during recent panics and downturns? In rising equity markets, bitcoin and gold have a slight positive correlation of 0.057.  Amid stock market crashes, the correlation rises only slightly to 0.064.So, whatever the state of the equity markets, the correlation between gold and bitcoin is pretty close to zero.Based on our data, crypto certainly does not act like digital gold. 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