This year, the pandemic has left few stones unturned when it comes to economic uncertainty. From mass unemployment, lockdowns, and swiftly increasing government debt, there’s no denying that traditional markets have taken a knock. As more and more traditional investors have looked into alternative ways to keep their funds safe, statistics indicate that Bitcoin and gold were among two of the best contenders. Leaving many to wonder why Bitcoin, gold, and other uncorrelated assets are climbing?
Exempt from currency inflation and political mishappenings, these two uncorrelated assets became the unlikely “safe havens” for savvy investors looking to keep their funds in stable accounts.
Uncorrelated vs Correlated Assets
Traditional investments like stock and forex markets are largely connected and therefore susceptible to the movements of fiat currencies. For instance, when the US dollar does well, the stock exchange tends to see a paralleled increase. However, when a fiat currency takes a dive, the correlated assets market tends to go with it.
When talking about uncorrelated assets, we’re looking at investments with few ties to fiat currencies. So a dip in the market does not necessarily equate to a dip in an uncorrelated asset’s value, such as cryptocurrency or commodity markets.
Any sound investment portfolio should have a mixture of both, to ensure safekeeping when one market might turn. Hence, during an international pandemic many investors have seeked uncorrelated assets to minimize their risk exposure and preserve value.
Among the few uncorrelated assets that are truly unlinked to the stock markets, gold and Bitcoin (and a few other cryptocurrencies) were among the few assets that were surprisingly able to hold their value in 2020.
Commodities, particularly gold and silver, have gained a strong reputation for being reliable uncorrelated assets. In just 20 years, gold has increased from $257/oz to $1,971/oz, well outperforming the US dollar to which it is measured against.
Another sterling example is Bitcoin, which spearheaded an entirely new monetary system based off of the fact that it is not pegged to fiat currencies. Fittingly, the cryptocurrency was designed in 2008 in response to the 2007-2009 global financial crisis, and has increased in value from 0 in 2009 to over $10,000 today.
Read more: Top 5 Gold Backed Cryptocurrency List
The Rise In Bitcoin Interest
Since the global collapse of many markets, it has been Bitcoin and gold that have seen the most positive market activity in this year. Both markets have climbed to impressive gains, with gold reaching its highest value in history.
As many investors took to hedging their value against the impending economic recession, unlikely “safe haven” assets saw a lot more interest, and a lot more investors. Whether traditional or cryptocurrency investors, the crypto markets saw an heavy flow of interest as the markets presented a more stable opportunity.
Now that we’ve covered why Bitcoin, gold, and other uncorrelated assets are climbing, if you’re looking to enter the safe haven market of cryptocurrency, particularly Bitcoin, look no further than Oobit. With an instant and incredibly smooth process, you can buy Bitcoin with your credit and debit card instantly, and store the cryptocurrency in the military-grade wallet for safe keeping.
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