);)
Low correlation with major assets… Excellent diversification effect
According to market sources, CEO Wood said in his recently released "Outlook to 2026" report that "Bitcoin will provide asset allocators with higher returns per unit of risk due to its low correlation with major asset classes such as gold, stocks, and bonds," adding that "it will be an effective investment portfolio diversification tool in the coming years."
A low correlation means that Bitcoin's price moves independently of other assets, making it a great asset for diversifying overall risk when included in a portfolio.
BTC-bonds 0.06, BTC-gold 0.14… Proving independence from traditional assets.
Ark Invest's analysis supports this. An analysis of weekly returns from January 2020 to the beginning of this month found that the correlation coefficient between Bitcoin and gold was a mere 0.14.
This figure is significantly lower than the correlation coefficient between the S&P 500 and bonds, which stands at 0.27. Bitcoin and bonds had the lowest correlation coefficient at 0.06, while the correlation with the S&P 500 was the highest at 0.28, but this is still significantly lower than the correlations between traditional asset classes.
The correlation coefficient is a value between -1 and 1, with a value closer to 0 indicating that the price movements of the two assets are independent of each other.
Scarcity created by limited supply… Annual growth rate less than 1%
CEO Wood emphasized Bitcoin's structural scarcity. "The Bitcoin protocol strictly limits supply growth," he explained, adding, "The annual growth rate of new issuance will be only about 0.8% for the next two years, and will slow further to about 0.4% thereafter."
He emphasized that "this mathematically fixed supply gives Bitcoin its inherent scarcity."
Stocks have surged 360% since their 2022 lows, with demand expected to continue to grow.
"Predictable supply patterns combined with consistently increasing demand have driven the Bitcoin price up 360% since the end of 2022," Wood said.
Indeed, Bitcoin has been on a tear, having hit a low of around $16,000 in November 2022 and now recovering to the $70,000 level this month.
Wood, the CEO, predicted that demand will continue to grow as institutional investor adoption of Bitcoin accelerates and accessibility improves, including through the approval of spot ETFs.
Financial experts believe that Cathie Wood, a prominent figure who has consistently presented an optimistic outlook on Bitcoin, will influence institutional investors' decisions to include Bitcoin in their portfolios.
Joohoon Choi joohoon@blockstreet.co.kr
