Bitcoin Is Still Failing As A Flight To Safety Investment

Yet again, bitcoin bulls arguing that the popular cryptocurrency is a flight to safety investment during times of stock market weakness have gotten some discouraging feedback during the coronavirus-driven market sell-off. The S&P 500 has experienced one of its sharpest drops in history in the past month, but bitcoin has performed even worse during that time.

There are plenty of reasons for investors to be seeking a safe haven for their cash these days given stocks are tanking and bond yields are at record lows. Unfortunately for bitcoin investors, it seems the market doesn’t see bitcoin as a viable way to preserve value.

In the past month, the SPDR S&P 500 ETF Trust SPY is down 17%. In that same stretch, the Grayscale Bitcoin Trust GBTC is down 23.9% and the price of bitcoin is down 20.9%. By comparison, the traditional flight to safety trade, gold, is performing well during the stock market sell-off. The SPDR Gold Trust GLD is up 5.8% in the past month, including another 1% rally on Wednesday morning.

See Also: How To Play The 2020 Stock Market Crash: Like 1987, 2000 Or 2008?


Here’s a look at the Portfolio Visualizer daily return correlation matrix for the SPY, the GBTC, the GLD ETF, the United States Oil Fund LP (ETF) USO, the iShares Barclays 20+ Yr Treas.Bond (ETF) TLT and the iPath S&P 500 VIX Short Term Futures TM ETN VXX. The correlations are calculated based on daily returns since January of 2018.

The good news is that the numbers suggest that the GBTC bitcoin fund does have a relatively low 0.12 correlation with the SPY ETF. In fact, the GBTC ETF has even less of a correlation to stocks than the GLD ETF, which has a negative 0.18 correlation. The negative correlation likely comes in part by the fact that investors tend to buy gold on days of market weakness.

Those arguing for bitcoin being its own asset class would point to the fact that the GBTC has very low correlation to stocks, gold, oil, treasury bonds or even market volatility, according to the table.

Unfortunately, the correlation between bitcoin and the SPY is positive, whereas the correlation between gold and the SPY is negative. In other words, bitcoin prices tend to drop when stock prices drop and gold prices tend to rise when stock prices drop.

See Also: Boredom Is The Enemy? A Look At Bitcoin Since Peaking At $20,000

Benzinga’s Take

The point of a flight to safety trade is to find a stable place to park cash when stocks are falling. Unfortunately, bitcoin hasn’t yet proven to be that place, and bitcoin investors have suffered even larger losses than stock investors over the past month.

Do you agree with this take? Email with your thoughts.

Posted In: BitcoincoronavirusGoldCryptocurrencyCommoditiesTop StoriesMarketsTrading Ideas

Ad Disclosure: The rate information is obtained by Bankrate from the listed institutions. Bankrate cannot guaranty the accuracy or availability of any rates shown above. Institutions may have different rates on their own websites than those posted on The listings that appear on this page are from companies from which this website receives compensation, which may impact how, where, and in what order products appear. This table does not include all companies or all available products.

All rates are subject to change without notice and may vary depending on location. These quotes are from banks, thrifts, and credit unions, some of whom have paid for a link to their own Web site where you can find additional information. Those with a paid link are our Advertisers. Those without a paid link are listings we obtain to improve the consumer shopping experience and are not Advertisers. To receive the rate from an Advertiser, please identify yourself as a Bankrate customer. Bank and thrift deposits are insured by the Federal Deposit Insurance Corp. Credit union deposits are insured by the National Credit Union Administration.

Consumer Satisfaction: Bankrate attempts to verify the accuracy and availability of its Advertisers' terms through its quality assurance process and requires Advertisers to agree to our Terms and Conditions and to adhere to our Quality Control Program. If you believe that you have received an inaccurate quote or are otherwise not satisfied with the services provided to you by the institution you choose, please click here.

Rate collection and criteria: Click here for more information on rate collection and criteria.