When we talk about Bitcoin there are two ways to see the cryptocurrency. The first is as an asset value reserve, in which investors can take refuge in times of uncertainty in the markets. The second, as a virtual currency that will revolutionize the global financial system. For Scott Melker the first alternative seems possible, after showing that the price of Bitcoin is not correlated with the stock in the Tweet of today:
Bitcoin price and its correlation with the financial market
The point of any asset value reserve is that its price is not correlated with that of the stock market. Well, if it were, when the global financial market fell due to social, political or economic crises, the price of these assets would also collapse. What ultimately would not make them a good refuge for capital seeking stability in uncertain times.
That is why the Coronavirus, the first major crisis that Bitcoin has faced in its history, has been so important. Well, it has been a litmus test to see if the cryptocurrency can qualify itself as an asset value reserve. Or if, on the contrary, it would be just one more financial product.
And so far, after the 49% drop in BTC on March 12, along with the rest of the financial market, the answer seemed clear. However, analyst Scott Melker, known by his nickname “The Wolf of All Streets”, seems to challenge this conclusion through a thread in which he explains that the price of Bitcoin is not correlated with the stock market:
“A score of 0 or close means that the assets are uncorrelated. In its 11-year history, Bitcoin has had a score of 0.15 – uncorrelated. This is closest to 0 for any asset. It recently reached 0.57, moderately correlated, for a short time“
Thus, Melker would explain that despite the brief correlation between Bitcoin and the stock market, during the collapse by the Coronavirus. In short, BTC has been the financial asset with the lowest correlation with the market throughout its history.