- BTC correlation with major US indexes oscillates around the zero mark, with frequent negative correlation periods.
- Rothschild Investment tripled their BTC holdings in Q2 2021 as per the latest SEC filing.
- More investors seek exposure to uncorrelated assets like BTC to diversify their portfolios.
Bitcoin’s receding correlation with stock indexes is bullish for the asset. A negative correlation increases its utility as a market hedge in traders’ portfolios.
Major US indexes are now more uncorrelated with BTC, bullish for the asset
Among other major indexes, the US Dollar Index and VIX Index have become more uncorrelated with Bitcoin. The indices correlation currently stand at -0.42 and -0.63, respectively, based on Into The Block data.
The BTC correlation with other indexes – Nasdaq 100, S&P 500, and Dow Jones Industrial Average – oscillates around the zero mark, close to becoming uncorrelated. Periods of negative correlation with BTC have become increasingly common for US stock market indices since May 2021. BTC price has suffered a drop since then.
More traditional finance traders seeking a diversified portfolio are turning to Bitcoin. Looking for exposure to non-correlated assets, these traders are likely to increase the demand for Bitcoin. The cryptocurrency has potential utility as a market hedge.
Institutional investors are increasing their exposure to Bitcoin consequently. Rothschild Investment, a money management firm, more than tripled its exposure to Bitcoin in Q2 2021. Based on their latest SEC filing, the firm increased its Grayscale Bitcoin Trust (GBTC) shares from 38,346 in Q1 to 141,405 in Q2.
The Chicago-based investment firm’s BTC holdings are currently worth $4.2 million. The firm’s latest purchase coincided with a Bitcoin price drop in the market. However, the price drop likely had no impact on Rothschild Investment’s decision to buy GBTC shares.
Grayscale CEO Michael Sonnenshein commented on Bitcoin’s price drop and its impact on institutional buying,
Investors in this asset class are really not focused on the short-term or really short-term movements in price. These are the investors looking at their allocations medium to longer term. And so any volatility or even dampening of volatility is not something that anyone is hazed by.
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