Bitcoin’s Unmatched Non-Correlation with Traditional Assets

Bitcoin vs. the S&P 500: A Bold Statement

In a world where financial trends often echo one another, Anthony Pompliano, co-founder of Morgan Creek Digital, asserts that Bitcoin (BTC) is carving out its own path. In a recent series of tweets, Pompliano pointed to data indicating that Bitcoin has reached a 30-day correlation of zero with the S&P 500. This means, as he put it, "it could not be more uncorrelated than it is right now."

The Decoupling Drama

The concept of assets being correlated or uncorrelated isn’t just financial jargon—it’s crucial for investors. The chart Pompliano shared from behavior analysis platform Santiment illustrates this correlation, or lack thereof, dramatically. If you squint just right, you may almost see Bitcoin giving a cheeky wink at the stock market.

Safe Haven? Bitcoin as a Shield

According to Pompliano, Bitcoin’s recent performance in the wake of financial anxiety during the COVID-19 pandemic means it has earned its stripes as a credible safe haven. He emphasized that since the markets felt the sting of Coronavirus in March, Bitcoin has outperformed major assets, including stocks, bonds, gold, and oil. Here’s a fun fact: while gold saw a respectable 24% return, BTC offered investors a jaw-dropping 83% year-to-date return.

Bitcoin: 83%
Gold: 24%
S&P 500: 6%

Temporary Correlation or New Normal?

Pompliano also explained that previous correlations between Bitcoin and traditional assets were more of a panic-induced fling than a committed relationship. During times of economic uncertainty, the correlations across asset classes tend to rise—like that friend who shows up during a crisis. "This was just a temporary thing," he argues, referring to the March events that caused widespread panic across the markets.

The Future: Independence Day for Bitcoin?

Analyst Willy Woo has also been vocal about Bitcoin’s potential to break free from its previously intertwined relationship with traditional markets. He proclaimed, "The decoupling is upon us," suggesting that while short-term traders might experience similar movements in asset correlation, BTC is set for a long-term deviation. Woo believes Bitcoin is the ultimate safe haven, and he’s not shy about it. Just don’t expect every investment to have the same gag reflex as during a liquidity crisis.