BITO (Bitcoin Asset) as an alternative diversification asset
Updated
Fundamental Analysis
Bitcoin is highly correlated with Equity assets in the near-term. The asset would decouple from this positive correlation the way Gold did when it switched from a speculative commodity into a safety asset. In the short-term, there will be high volatility, but in the long-term this asset could decouple from the Equity market once regulations are increased on it.
BITO etf has had a huge sell-off and could be a good hedge for a portfolio in the long-term, with a potential for a huge spike once regulations favour this commodity as a viable risk asset.
From a portfolio approach, it helps with diversification in the long-term when the asset starts to trade more uncorrelated with the equity markets and trades more like the derivatives market.
This is still not a well-established risk asset and should be treated like currencies in the short-term.
Technical Analysis
Bitcoin in the short-term is acting like an equity risk asset. Over the long-term, it should decouple and be a better risk instrument. However, it is still underpriced compared to gold and can be used as a risk hedge for a portfolio.
Bitcoin is highly correlated with Equity assets in the near-term. The asset would decouple from this positive correlation the way Gold did when it switched from a speculative commodity into a safety asset. In the short-term, there will be high volatility, but in the long-term this asset could decouple from the Equity market once regulations are increased on it.
BITO etf has had a huge sell-off and could be a good hedge for a portfolio in the long-term, with a potential for a huge spike once regulations favour this commodity as a viable risk asset.
From a portfolio approach, it helps with diversification in the long-term when the asset starts to trade more uncorrelated with the equity markets and trades more like the derivatives market.
This is still not a well-established risk asset and should be treated like currencies in the short-term.
Technical Analysis
Bitcoin in the short-term is acting like an equity risk asset. Over the long-term, it should decouple and be a better risk instrument. However, it is still underpriced compared to gold and can be used as a risk hedge for a portfolio.
Comment
As per latest report in Barron's Crypto has started to decouple from stocks where Bitcoin is down 34% while Nasdaq is down 25%.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.