Asset management giant BlackRock published a special article on Bitcoin, explaining that Bitcoin is an independent risk asset and has no correlation with most macro conditions. Although it is still in the early stages of adoption, for investors, Bitcoin Coins may become an increasingly unique diversification tool against some of the fiscal, monetary and geopolitical risk factors investors may face in their portfolios.
Since Bitcoin was launched on the market in 2010, the return rate has reached 800,000 times
Bitcoin has outperformed all major asset classes in seven of the past 10 years, giving it extraordinary annualized returns of over 100% over the past decade. Although Bitcoin was also the worst-performing asset in the other three years of the decade, falling by more than 50% four times. Through these historical cycles, it has shown the ability to recover from such pullbacks and reach new highs despite extended bear market periods.
Bitcoin has extremely low correlation with other assets
Bitcoin is minimally affected by other macro variables, which explains its low long-term average correlation with stocks and other “risk assets.” BlackRock calculated the six-month tracking correlation between the S&P 500 index in the U.S. stock market and Bitcoin and gold since 2015, and found that the average correlation coefficient between Bitcoin and the S&P 500 index was only 0.2%, and even negative at some times. Related.
While there are times when Bitcoin's correlation spikes over short periods of time—particularly around sudden changes in U.S. dollar real interest rates or liquidity—these events are short-term in nature and fail to produce clear long-term statistically significant correlations.
How Bitcoin performs during major geopolitical events
As the first decentralized, non-sovereign currency alternative to be widely adopted around the world, Bitcoin has no traditional counterparty risks, does not rely on any one central system, and is not driven by the fate of any one country. These characteristics make it fundamentally independent of certain key macro risk factors, including banking system crises, sovereign debt crises, currency depreciation, geopolitical instability, and other country-specific political and economic risks. Over the long term, Bitcoin’s adoption trajectory is likely to depend on the ebb and flow of concerns about global currency instability, geopolitical disharmony, U.S. fiscal sustainability, and U.S. political stability.
Because of these attributes, over the past five years, some investors have viewed Bitcoin as a "safe haven" during times of fear. Notably, in some of these cases, Bitcoin first showed a brief negative reaction before subsequently rebounding. In most cases, including the recent global market sell-off on August 5, 2024, Bitcoin has recovered to previous levels within days or weeks, and in many cases, as people begin to recognize such damage Bitcoin prices rose further due to the potential positive impact of sexual incidents on Bitcoin fundamentals.
Bitcoin remains a risky asset, but can be considered a unique diversification tool
However, BlackRock still believes that Bitcoin remains a very risky asset on a stand-alone basis. Bitcoin is an emerging technology, still in the early stages of adoption, that has the potential to become a global payments asset and store of value. But it also faces numerous risks, including regulatory challenges, uncertainty about the path to adoption, and a still immature ecosystem.
But as the global investment community grapples with rising geopolitical tensions, concerns over U.S. debt and deficit conditions, and rising global political instability, Bitcoin may be viewed as an increasingly unique diversification tool that can withstand Some of the fiscal, monetary and geopolitical risk factors investors may face elsewhere in their portfolios. From a portfolio perspective, this is why holding Bitcoin with a modest allocation can have a diversifying impact on a portfolio.
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