Although cryptocurrencies are going through a tough time right now, many investors still see cryptocurrencies as an insurance and stabilizer against the stock market and other traditional investment vehicles. Especially as the US stock markets crashed. BTC‘s success in the past years has made it possible for many individuals and institutions to see it as insurance against other investments. IMF he thinks that this is no longer valid.
Is Bitcoin No Longer An Alternative Investment?
International Monetary Fund, Bitcoin (BTC) and emphasized that the correlation between cryptocurrencies and traditional financial markets is constantly increasing. In the blog post published by IMF officials, it is stated that especially traditional stock markets are currently in a positive correlation with cryptocurrencies. This refutes the thesis of those who want to use cryptocurrencies as insurance against traditional investments.
When the IMF looks at the 60-day correlation, it finds a 0.01 correlation between the movements of the S&P 500 and BTC between 2017 and 2019. In the 2020-2021 period, it is seen that this has increased to the level of 0.36. In the study, it is stated how much of an increase this is and that BTC is now advancing to a large extent with the S&P 500.
The IMF thinks that this correlation has increased due to the response of central banks to the coronavirus epidemic and the measures they have taken. Institutions may have added cryptocurrencies such as BTC to their portfolios as an alternative investment tool against alternative market movements.
Accordingly, the IMF thinks that BTC will no longer be as popular as it used to be. However, the main event here seems to be that the IMF has always seen BTC in the same status for years and now publishes such a detailed research in favor of BTC.