Bitcoin and Gold “Inversely Correlated,” One is a Risk Asset and Other Safe Asset: BofA Head of Commodities
According to Francisco Blanch, bitcoin is good for “creating a new ecosystem of value transfer” and a new economic organization based on the stakeholder economy as opposed to the current shareholder economy.
For the last few months, Bitcoin price has been moving in the opposite direction of gold as people turn to digital gold as a store of value rather than the traditional safe-haven asset.
But to Francisco Blanch, head of global commodities and derivatives research at Bank of America Securities, Bitcoin is more of a risk-on asset.
Back in March, Blanch argued that Bitcoin had serious environmental issues and that it was completely uncorrelated to the asset classes.
But it “became more of a risk asset in the past twelve months,” which was “highly correlated to equities to Mexican peso to copper,” he said.
Meanwhile, gold as a safe asset is typically correlated to 10-year Treasuries and the Japanese yen.
So, when it comes to whether bitcoin and gold are linked, “in a way they are because one is a risk asset and the other is a safe asset,” said Blanch in an interview with Bloomberg, adding, they have very different characteristics.
According to him, “gold's been a safe asset for a very very long period of time” as such, he’s pretty confident that precious metal stays that way while bitcoin can keep on changing, “but for now, they're inversely correlated, quite inversely correlated.”
Bitcoin Is A Better Version
Meanwhile, Michael Novogratz, founder, CEO, and chairman at Galaxy Digital, continues to see the leading cryptocurrency as a better bet than the bullion.
With central banks all over the world printing more and more money, Novogratz said one needs to be long hard assets which are real estate, gold, stocks, and crypto. In a separate Bloomberg interview, he said,
“So, I look at bitcoin in particular as digital gold, and so if you're going to be long gold, bitcoin is a better version because it's got the same macro tailwinds, but it's also very early in the adoption curve.”
While people were scared of bitcoin a few years ago, now from hedge funds to real money managers and insurance companies, they all are ok with it.
“So you're playing an adoption game, and you're playing a macro game. And so I'm still a big buyer of Bitcoin.”
Meanwhile, according to Blanch, what bitcoin is good for is “creating a new ecosystem of value transfer.” As opposed to the shareholder economy that we have today, it is creating a new economic organization based on the stakeholder economy, he added.
Bitcoin is the base on which all the other coins are built, and that's what is ultimately going to shape up — basically, communities of people that transfer value using these cryptocurrencies, said Blanch.
“This is why the IRS is so interested in taxing this because they realize there is a lot of economic activity, real economic activity, not just criminal gangs.”