Bitcoin’s volatility and price fluctuations have eased and it is now closing in on gold.
Until now, most of the criticism from investment advisors has been $BTC As a hedge or as an alternative to gold, it was considered too volatile to incorporate into clients’ portfolios.
Bloomberg ETF analyst Eric Balchunas said the narrowing volatility gap could be a “good sign.”
Bitcoin’s volatility and correlation are increasingly approaching that of gold, but this is underreported and perhaps one positive from this difficult situation.
BlackRock’s iShares Bitcoin Trust (IBIT) 60-day volatility index has fallen from over 60 to around 35. Similarly, gold ETF volatility has fallen from 43 to around 25.
Citing insights from high-level ETF leaders, Balciunas added:
The big money in the world (institutions and advisors) is not interested in the returns of tech stocks. $BTC (They can get it with QQQ etc.), they want returns like gold, which is a true alternative asset, because diversification is just a free lunch.
According to him, “true alternative asset” status is only achieved when both assets have similar volatility. I don’t know yet $BTC And gold will eventually close the volatility gap.
$BTC Gold ETF outflows are becoming more serious
The reduction in volatility between the two assets has coincided with ETF outflows. What is noteworthy is that overall $BTC ETF inflows exceeded $5 billion in early May. As of this writing, flows had dropped to almost zero.
In gold, even more investors are exiting. For example, gold ETFs recorded nearly $8 billion in outflows over the same period.
For JPMorgan analysts led by Nikolaos Panigirtzoglou, this was a “downgrade trade,” or a dampening of macro-hedging demand as investors anticipate a possible U.S.-Iran deal.
Analysts say land trade was at its peak during the early months of the West Asian crisis, which raised concerns about inflation. Therefore, there is no need for macro hedges such as gold and gold. $BTC If the energy shock is addressed by a potential deal between the US and Iran.
At the time of writing, $BTC was trading at $73.5K, down 11% from its Q2 high of $82.8K. However, considering historical circumstances, $BTC/gold ratio, lowest $BTC It may have been a hit or it may form soon.
Especially in 2022. $BTC bottomed near support $BTC/Gold ratio level 10.
Final summary
- $BTC’s 60-day volatility fell sharply in May and is now at roughly the same level as gold, which could soon lead to an increase in volatility. $BTC Attractive to institutional investors
- JP Morgan analysts think this way $BTC And the outflow of gold ETFs means that the “subsidence trade” may be calming down with the possibility of a deal between the US and Iran.
