Bitcoin Typically Acts As Risk Asset

Bitcoin fell 8% Friday, on the same day, the S&P 500 index retreated by 2.3%, that is to mean the most famous cryptocurrency is not the ideal hedge against volatility in the financial market as may be claimed by its backers.

The hedge today was bonds, similar to much of market history. The 10-year Treasury yield slid 17 basis points to 1.48%. Bitcoin recently traded at $54,263 and dipped as low as $53,625 earlier Friday. It has soared from its 2009 beginning, but with substantial volatility along the way.

For example, Bitcoin plunged 53% between April 12 and July 19 2021. The world’s biggest cryptocurrency has jumped 85% year to date, therefore, Bitcoin is still by and large a risk asset,

Investors who defend Bitcoin have been insisting for some time that the digital asset represents a hedge against inflation too, but obviously that wasn’t the case Friday.