What is Bitcoin’s Correlation With Other Financial Assets?
Kevin Lu

Kevin, I appreciate the time you took to deconstruct all the data involved and plotting it all. I think that one reason Bitcoin is non-correlated even to “safe haven” assets is that its fundamentals are largely known.

In relation to Gold, there is a finite amount produced per year among all the Gold miners. This of course doesn’t mean that this production can’t be affected by the discovery of a large unknown deposit — or if the Silicon Valley Billionaires have anything to say about it — asteroid mining.

Bitcoin’s characteristics are deeply embedded in the code, so I know for a fact that only 21 Million Bitcoins will ever be “mined”. (Pedants can stop arm-waving, saying a fork of major consensus can change rules, the resting network inertia to maintain the existing limits is very, very, large.)

Compared to a physical asset like Gold, there are no potential discoveries of Bitcoin to worry about. Or in the case of sovereign bonds, there isn’t the potential of a budgetary/debt crisis wiping out any ability to pay investors their coupon/interest payments.

While Bitcoin isn’t “bulletproof” in the sense that it is a financial system embedded in the internet, and shares the same vulnerabilities that any internet-enabled system does, it does have unique strengths and fundamentals that truly make it an asset class of its own.

Thanks for the article, it was an informative and interesting read.