BTC correlation with stocks shows it is no safe haven asset or ‘digital gold’October 13, 2020
The speculative vehicle called BTC is often portrayed as a safe haven asset by its proponents. However, it is becoming more and more obvious that BTC is correlated to the stock market and therefore does not fulfill its promise of being “digital gold.”
Recently, the stock market turned down on the news that U.S. President Donald Trump tested positive for COVID-19. To the surprise of many “cryptocurrency speculators,” BTC also retreated.
BTC’s price movements follow equity markets
It is not the first time we witness BTC’s price movements to be highly consistent with price movements in stock markets.
Some months ago, we covered Canaccord Genuity Group Inc.’s Digital Assets Quarterly – Q2 2020 report, which showed BTC’s correlation with the S&P 500 spiked amid COVID-19 related uncertainty.
CoinGeek’s Jon Southurst once called BTC a “digital Dow Jones” and rightly so.
Why BTC is not a safe haven asset
A safe haven asset is an asset that still performs or at least secures value when other assets sink in a crisis. However, why do safe haven assets actually act in such a way contrary to other assets?
The most prominent example of a safe haven asset is gold. Even in times of a financial crisis or market turmoil, gold will not go to zero—and this is key. It does not go to zero, because there is underlying utility to gold. Aside from speculation and protecting your portfolio, gold has use cases such in high end electronics and jewelry therefore is valuable.
Now look at BTC—how could BTC be a safe haven asset if there is no utility in BTC? For technical reasons, BTC is not electronic cash as described in the Bitcoin whitepaper. It cannot perform low cost transactions, a fact that most BTC speculators oversee as they never actually move their coins from “cryptocurrency exchanges.”
Bitcoin service provider Anypay published an article called “Using BTC sucks”:
“At the time of publishing (May 21), the cost to get your BTC transaction into the next block on the BTC blockchain is 318 sats/byte (roughly $7.50) (…) Let us say you are patient and can wait an extra twenty minutes to an hour, so you include a fee of $5.00… Even if your customer is only sending you $1.00, they have to pay $1.00 to you, plus $5.00 on top of that to send the transaction. It costs them $6.00 to send you $1.00.”
So there is no underlying utility in BTC. In times of financial crisis or market turmoil, BTC offers nothing to protect one’s portfolio.
The ‘digital gold’ deception concerning BTC
How come BTC is perceived as a “digital gold”-like safe haven asset though? Cloud-based services company MicroStrategy recently bought $250 million worth of BTC, so there has to be something about BTC then, right?
“BTC is digital gold — harder, stronger, faster, and smarter than any money that has preceded it,” said MicroStrategy CEO Michael Saylor.
Unfortunately for MicroStrategy, BTC is neither digital gold, nor a store of value.
There are organized entities we call the “crypto cartel” or even “crypto crime cartel” that are incentivized to portray BTC as a safe haven asset in order to profit from uneducated speculators and financial laymen. Only through massive investments in “crypto media outlets” and through social media warfare, the “crypto cartel” managed to deceive the digital asset sphere of believing BTC is Bitcoin. They want you to “hodl” BTC for their very own reasons and even MicroStrategy fell for it.
The ongoing war on Bitcoin explains a lot here: BTC is not Bitcoin according to the Bitcoin whitepaper, the original Bitcoin is nowadays known as Bitcoin SV (BSV).
BTC’s correlation to stock markets might dissolve in the end
Even though BTC trades consistent with stock markets right now, this will probably not last for much longer. The “cryptocurrency exchange system” behind BTC is already under regulatory and general legal pressure and will be cracked down upon further.
Once the “crypto crime cartel” is being investigated properly, BTC’s market liquidity will disintegrate quickly. There is no digital gold in BTC, and there is not even a real market behind BTC.
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