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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Comment（12）

Desmond669
·2022-07-13
Qqq
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1
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HCH88
·2022-07-13
[Like]
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1
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haircut
·2022-07-13
Only invest with you surplus
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JC888
·2022-07-13
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.
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11
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Vincent1968
·2022-07-13
Okie
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1
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ThinkOrSwim
·2022-07-13
If u want to buy bits and bytes as an investment, go buy a hard disk.
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3
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TigerHulk
·2022-07-13
Sell sell sell
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3
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DarkFate
·2022-07-13
Like
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3
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BerryNat
·2022-07-13
Lol noooo.
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2
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Heng08
·2022-07-13
Ok
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2
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Victorhc88
·2022-07-13
Like
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3
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Suman923
·2022-07-13
👍
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4
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The assumption is that cryptoassets will act like “...</p>\n\n<a href=\"https://blogs.cfainstitute.org/investor/2022/07/12/digital-gold-or-fools-gold-is-crypto-really-a-hedge-against-equity-risk/\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"FT_SY_GC","symbol_name":"黄金","start_time":0,"source_url":"https://blogs.cfainstitute.org/investor/2022/07/12/digital-gold-or-fools-gold-is-crypto-really-a-hedge-against-equity-risk/","article_id":"2251273729","we_media_id":null,"thumbnails":[],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=2251273729","pubTimestamp":1657680597,"sourceInfo":{"source_id":"lsy1657680435045","name":"Enterprising Investor"},"weMediaInfo":null,"summary":"Crypto enthusiasts often claim that digital coins and tokens are uncorrelated with equities and can ","collect":0,"end_time":0,"defaultTopTitle":"cfainstitute.org","property":[],"viewcount":null,"language":"en","relate_stocks":{"GBTC":"Grayscale Bitcoin Trust"},"translate_title":"数字黄金还是傻瓜黄金：加密真的是对冲股票风险的工具吗？","themeId":"","isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"BTCmain":0.9,"GCmain":0.9,"MBTmain":0.9,"GBTC":0.9},"content_text":"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 “digital gold,” serving as a hedge against equity risk, and help investors ride out such downturns.Such bold claims beg for examination, especially amid what looks like a bear market for stocks. So, we explored how crypto has performed during previous crashes. In particular, we isolated the major panic events over crypto’s short history and studied the correlation between this new asset class and some of its more traditional peers.Five times over the last five years, the S&P 500 fell 7.5% or more. In each of these instances, we measured how correlations changed between gold and the S&P 500, bitcoin and the S&P 500, and bitcoin and gold. We examined the correlations between other cryptocurrencies and gold and the S&P 500 as well but found the results were qualitatively similar, so we used bitcoin as a proxy for crypto in general.The correlation between gold and the S&P 500 came in as expected. Outside of major downturns, gold and the S&P 500 have just a slight positive correlation of 0.060. Yet, when the S&P 500 plunges, so does its average correlation with gold, which drops to –0.134. The takeaway is clear: Gold does offer some protection in down markets and lives up to its status as a perennial hedge.The same cannot be said for bitcoin — or crypto in general. Outside of equity market downturns, bitcoin and the S&P 500 have had a slight positive correlation of 0.129. Amid the last five stock market contractions, however, the correlation between bitcoin and the S&P 500 jumped to 0.258. Indeed, in only two of the past five downturns did the correlation turn negative. 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. In times of panic, the correlation between crypto and the stock market actually increases. So, whatever its proponents may say about its utility as a hedge against market downturns, crypto has served as more of an anti-hedge, with its correlation with the S&P 500 rising as stocks plunge.That said, given the lack of correlation between gold and crypto, the latter may add some diversification benefits to a portfolio.Nevertheless, the overall verdict is undeniable: When it comes to hedging equity risk, bitcoin and cryptocurrencies are more fool’s gold than digital gold.","kind":null,"is_publish_news":true,"is_publish_highlight":true,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"0","news_tag":"","news_rank":0,"symbols":[],"gpt_button":1},"commentList":[{"id":9078215091,"gmtCreate":1657691185613,"gmtModify":1676536047251,"author":{"id":"3562118563279867","authorId":"3562118563279867","name":"Desmond669","avatar":"https://static.tigerbbs.com/e2484115c94d3471cb46f20ea7598b4a","vip":1,"crmLevel":2,"crmLevelSwitch":0,"idStr":"3562118563279867","authorIdStr":"3562118563279867"},"htmlText":"Qqq","listText":"Qqq","text":"Qqq","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":1,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9078215091","repostId":2251273729,"repostType":4,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":9078294820,"gmtCreate":1657687990960,"gmtModify":1676536046710,"author":{"id":"4087923330380190","authorId":"4087923330380190","name":"HCH88","avatar":"https://static.laohu8.com/default-avatar.jpg","vip":1,"crmLevel":1,"crmLevelSwitch":0,"idStr":"4087923330380190","authorIdStr":"4087923330380190"},"htmlText":"[Like]&nbsp;","listText":"[Like]&nbsp;","text":"[Like]","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":1,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9078294820","repostId":2251273729,"repostType":4,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":9078209740,"gmtCreate":1657685213480,"gmtModify":1676536046311,"author":{"id":"4102455619608180","authorId":"4102455619608180","name":"haircut","avatar":"https://static.tigerbbs.com/664eac8e1f74f7555d093f964e7bab93","vip":1,"crmLevel":2,"crmLevelSwitch":0,"idStr":"4102455619608180","authorIdStr":"4102455619608180"},"htmlText":"Only invest with you surplus&nbsp;","listText":"Only invest with you surplus&nbsp;","text":"Only invest with you surplus","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":0,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9078209740","repostId":2251273729,"repostType":4,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":9078670433,"gmtCreate":1657683353722,"gmtModify":1676536045962,"author":{"id":"3570103090255456","authorId":"3570103090255456","name":"JC888","avatar":"https://community-static.tradeup.com/news/f3e3c0218599fca5c4e265ddbee1fb32","vip":1,"crmLevel":4,"crmLevelSwitch":1,"idStr":"3570103090255456","authorIdStr":"3570103090255456"},"htmlText":"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.&nbsp;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&nbsp;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.&nbsp;Just wish people invest in crypto with the notion that if they lose everything they will still be OK.&nbsp;","listText":"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.&nbsp;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&nbsp;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.&nbsp;Just wish people invest in crypto with the notion that if they lose everything they will still be OK.&nbsp;","text":"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.","images":[],"top":1,"highlighted":2,"essential":1,"paper":1,"likeSize":11,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9078670433","repostId":2251273729,"repostType":4,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":9078641489,"gmtCreate":1657682560841,"gmtModify":1676536045798,"author":{"id":"3586393315819735","authorId":"3586393315819735","name":"Vincent1968","avatar":"https://community-static.tradeup.com/news/7f106edb1e06baf3c68462c050422f46","vip":1,"crmLevel":2,"crmLevelSwitch":0,"idStr":"3586393315819735","authorIdStr":"3586393315819735"},"htmlText":"Okie&nbsp;","listText":"Okie&nbsp;","text":"Okie","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":1,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9078641489","repostId":2251273729,"repostType":4,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":9078649071,"gmtCreate":1657682141493,"gmtModify":1676536045726,"author":{"id":"4107161170881400","authorId":"4107161170881400","name":"ThinkOrSwim","avatar":"https://static.itradeup.com/news/456b9d740a0500cd2e7af1a1332c61de","vip":1,"crmLevel":2,"crmLevelSwitch":0,"idStr":"4107161170881400","authorIdStr":"4107161170881400"},"htmlText":"If u want to buy bits and bytes as an investment, go buy a hard disk.","listText":"If u want to buy bits and bytes as an investment, go buy a hard disk.","text":"If u want to buy bits and bytes as an investment, go buy a hard disk.","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":3,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9078649071","repostId":2251273729,"repostType":2,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":9078657649,"gmtCreate":1657681954881,"gmtModify":1676536045695,"author":{"id":"4111448269923362","authorId":"4111448269923362","name":"TigerHulk","avatar":"https://community-static.tradeup.com/news/9e1491ac4fc7b7459eacd64c6be410ae","vip":2,"hat":"https://static.tigerbbs.com/ae1f49570794979e009a5efdeb6f4789","crmLevel":7,"crmLevelSwitch":1,"idStr":"4111448269923362","authorIdStr":"4111448269923362"},"htmlText":"Sell sell sell","listText":"Sell sell sell","text":"Sell sell sell","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":3,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9078657649","repostId":2251273729,"repostType":4,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":9078656479,"gmtCreate":1657681380991,"gmtModify":1676536045623,"author":{"id":"4097476142152970","authorId":"4097476142152970","name":"DarkFate","avatar":"https://static.tigerbbs.com/a22f6ff84fe185b6d3ad31b8673302d8","vip":1,"crmLevel":2,"crmLevelSwitch":1,"idStr":"4097476142152970","authorIdStr":"4097476142152970"},"htmlText":"Like&nbsp;","listText":"Like&nbsp;","text":"Like","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":3,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9078656479","repostId":2251273729,"repostType":4,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":9078656166,"gmtCreate":1657681365956,"gmtModify":1676536045608,"author":{"id":"4087986020499840","authorId":"4087986020499840","name":"BerryNat","avatar":"https://static.tigerbbs.com/27333e490249edd9b1054f0311c8584c","vip":1,"crmLevel":2,"crmLevelSwitch":0,"idStr":"4087986020499840","authorIdStr":"4087986020499840"},"htmlText":"Lol noooo.","listText":"Lol noooo.","text":"Lol noooo.","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":2,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9078656166","repostId":2251273729,"repostType":4,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":9078658865,"gmtCreate":1657681337757,"gmtModify":1676536045584,"author":{"id":"4088201880010570","authorId":"4088201880010570","name":"Heng08","avatar":"https://community-static.tradeup.com/news/505153f04c3a6654891a2cb833a63f89","vip":1,"crmLevel":5,"crmLevelSwitch":0,"idStr":"4088201880010570","authorIdStr":"4088201880010570"},"htmlText":"Ok","listText":"Ok","text":"Ok","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":2,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9078658865","repostId":2251273729,"repostType":2,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":9078651332,"gmtCreate":1657681222226,"gmtModify":1676536045553,"author":{"id":"3582248650466523","authorId":"3582248650466523","name":"Victorhc88","avatar":"https://static.tigerbbs.com/d72a1d9498132424b1eddb4db3c77265","vip":1,"crmLevel":2,"crmLevelSwitch":0,"idStr":"3582248650466523","authorIdStr":"3582248650466523"},"htmlText":"Like&nbsp;","listText":"Like&nbsp;","text":"Like","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":3,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9078651332","repostId":2251273729,"repostType":4,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":9078659911,"gmtCreate":1657681046533,"gmtModify":1676536045504,"author":{"id":"4106255543654800","authorId":"4106255543654800","name":"Suman923","avatar":"https://static.itradeup.com/news/384627ba396b79fe8268e629fed7a191","vip":1,"hat":"https://static.tigerbbs.com/b073a07f77dbe6b3bec6b12311fde6bd","crmLevel":2,"crmLevelSwitch":1,"idStr":"4106255543654800","authorIdStr":"4106255543654800"},"htmlText":"👍","listText":"👍","text":"👍","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":4,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9078659911","repostId":2251273729,"repostType":4,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"}],"hasMoreComments":true,"newsSizeData":{"likeSize":64,"commentSize":12,"repostSize":0,"favoriteSize":1,"likeStatus":false,"favoriteStatus":false}}