The crypto was supposed to be a hedge against currency debasement.
Instead, it is trading like just another speculative tech stock, erasing 50% of its value since an early October high.
Yet bitcoin prices have continued to trend lower since October, even as the U.S. dollar has weakened and worries about unsustainable levels of government debt have been blamed, at least in part, for driving a huge rally in gold.
On Thursday, bitcoin (BTCUSD) tumbled as much as 17% to trade as low as $60,057, the lowest level intraday since Oct. 11, 2024.
The 21-day rolling correlation between bitcoin and the ProShares UltraPro QQQ exchange-traded fund (TQQQ) – which aims to amplify daily swings in the Nasdaq-100 by three times – is far higher than bitcoin’s correlation with gold.
If it were truly a hedge against monetary excess, one might expect bitcoin to trade more closely in lockstep with gold.
Instead, its correlation with the ProShares UltraPro ETF stood at 0.4 on Thursday, after rising as high as 0.78 last year.
This undermines the idea that bitcoin offers meaningful diversification for an investor’s portfolio, according to Marta Norton, chief investment strategist at Empower.
Trump was supposed to be the “crypto president,” but hopes for a strategic bitcoin reserve have yet to pan out.
It’s just another speculative asset. If you’re looking for a store of value, you’re better off buying a rental property.
Investors have also become disillusioned with so-called digital asset treasury companies like Michael Saylor’s Strategy Inc. (MSTR).
The huge premium to its net assets that Strategy once enjoyed has turned into a discount.
Leave a Reply