Is bitcoin really an “uncorrelated safe haven”?

Over the years bitcoin has frequently been touted as a “safe haven”. It’s an idea that seemingly doesn’t to want to die, despite the fact that its pretty much the most volatile things you can get your hands on and there’s been a stream of thefts and hacks worth hundreds of millions of dollars from exchanges and other crypto platforms.

What makes the persistence of the idea particularly odd is that bitcoin has not performed like a safe haven asset to date.

Take a look at this chart from an article on Coindesk last month, for example, which charts bitcoin’s correlation with gold — traditionally seen as a safe haven — over the past four years:

You will see that the 90-day correlation swings between a positive one and a negative one — meaning that sometimes bitcoin goes up when gold goes up and sometimes it goes down. You will also see that the trend line shows a slightly negative correlation, which has become slightly weaker over time (0 represents zero correlation). There is certainly no positive correlation to gold, at least not for any meaningful length of time.

You might argue that despite its reputation as the ultimate store of value, gold itself hasn’t always performed like a safe haven, and you’d be right. But neither has bitcoin ever shown any consistently negative relation to share prices, nor any sign that investors pile into it when stock markets are plunging or when they are concerned about risks to the global economy.

The funny thing is that almost as often as bitcoin is referred to as a “safe haven”, it is referred to as uncorrelated from other assets; indeed the two ideas do not seem to be seen as incompatible.

Take Alphaville’s favourite non-self-identifying bitcoin bro Antony “Pomp” Pompliano, for example. In May, he tweeted that bitcoin is “the best safe haven currency in the world”:

But then the following month, the Pomp tweeted that bitcoin in fact didn’t care about essentially anything…

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