Bank of America analysts have said in a report on the strengthening correlation between Bitcoin and the stock index S&P 500 that the crypto should be classified as a risk asset class and should not be called a hedging instrument, Yahoo Finance has learned.
According to the paper, the crypto is highly dependent on the dynamics of the business activity indicator. The correlation has remained high since the middle of last year.
According to Bank of America, risky assets are those that show higher volatility, which include stocks and real estate.
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Despite the fact that Bitcoin has correlated with gold since the beginning of the covid-19 pandemic, the Bank of America is of the opinion that the crypto should only be considered as a risky asset.
Moreover, the bank refuses to take into account the limited supply of the cryptocurrency as another factor hinting at the nature of this instrument as a safe haven asset.
According to the bank's analysts, the correlation with the stock market will be high and Bitcoin will continue to show a wider range of price fluctuations.
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