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The start of 2021 has not been kind to bitcoin as the asset is down by more than 15% in less than two months. With this decline, the cryptocurrency has resembled the performance of the largest US stock market indexes, and the correlation between the two asset classes has reached a new all-time high, according to CryptoQuant.
Bitcoin Moves Inline With S&P 500
Aside from the typical COVID-19 concerns, 2022 began with more worries, some from an economic point of view, others from the geopolitical sphere.
More precisely, the US Federal Reserve outlined plans to increase interest rates as of March this year, which had an immediate impact on most financial markets.
However, what’s significantly more concerning is the situation in Eastern Europe and the growing tension between Russia and Ukraine. As the world’s largest country by landmass continues to threaten the borders of Ukraine and most Western countries led by the US and Germany willing to impose sanctions, the financial markets suffer even more.
Assets typically regarded as riskier, such as equities, have tumbled in the past several weeks. Russia’s stock market slumped, but the situation is somewhat similar across the pond. This is evident by reviewing the performance of the S&P 500, tracking the 500-largest companies trading on US markets. The popular index has declined by more than 10% since the start of the year.
Bitcoin, on the other hand, is trying to establish itself as a safe haven asset but its latest price movements suggest that it’s still more of a riskier one. The cryptocurrency is down by about 15% since January 1st this year.
In fact, by reviewing the performance of both – bitcoin and the S&P 500 – CryptoQuant determined that they move in-line, and their positive correlation has reached a new peak.
The analytics company’s CEO highlighted two outcomes from this conclusion. From one side, this means that BTC is “getting adopted by traditional institutions” as its ownership is “changing by new players who trade stock.” From the other, though, it means that “BTC is not a safe-haven asset. For now.”
What About Gold?
When talking about safe-haven assets, one should also take a look at gold since it’s traditionally regarded as a hedging tool. And its performance since the start of the year certainly supports this narrative.
While most financial assets, including the aforementioned ones, are deep in the red in the first several weeks of 2022, the bullion is up by around 5%. As of now, gold has reached its highest price point since early June 2021 at approximately $1,900/oz.
This article first appeared at CryptoPotato
