Bitcoin: A True Unrelated Asset or an Emerging Investment Opportunity?

In today's financial markets, Bitcoin, as a digital asset, seems to always be at the center of controversy. Some people believe that it is an unrelated asset that lacks intrinsic value and cannot be compared with traditional investment tools; while others believe that Bitcoin is an emerging investment opportunity with potential that cannot be ignored. This article will delve into the value positioning of Bitcoin and analyze whether it is truly unrelated or a potential investment opportunity.

First of all, the concept and characteristics of Bitcoin are worth our in-depth understanding. Bitcoin is a decentralized digital currency proposed by Satoshi Nakamoto in 2009. It is based on blockchain technology and ensures the security and transparency of transactions. Unlike traditional currencies, Bitcoin does not rely on the support of central banks or governments, which makes it an asset with a high degree of freedom. The total supply of Bitcoin is limited to 21 million pieces, and this scarcity makes many investors regard it as "digital gold".

When considering whether Bitcoin is an unrelated asset, we need to pay attention to its price volatility. Since the birth of Bitcoin, its price has experienced many dramatic fluctuations. For example, in 2017, the price of Bitcoin soared from $1,000 to nearly $20,000, and then quickly fell back to $3,000. This dramatic price fluctuation has attracted a large number of speculators to Bitcoin in the short term, but it has also caused many people to doubt its long-term investment value.

However, despite its high price volatility, Bitcoin still shows its unique value as an asset in some cases. For example, when global economic uncertainty increases, many investors choose Bitcoin as a safe haven asset. During the COVID-19 pandemic in 2020, global stock markets fell sharply, and many investors turned to Bitcoin, causing its price to rise sharply. This phenomenon proves that Bitcoin can form a certain hedging relationship with traditional assets to a certain extent.

The decentralized nature of Bitcoin is also one of the important factors that attract investors. Compared with the traditional financial system, Bitcoin transactions are not controlled by any single institution, avoiding the policy risks and currency depreciation risks that traditional assets may face. This feature makes Bitcoin popular worldwide, especially in some economically unstable countries, where many people have begun to use Bitcoin as a means of value preservation.

It is worth noting that although Bitcoin has more and more supporters, there are also voices of opposition. Many economists and investment experts believe that Bitcoin lacks substantial intrinsic value. Compared with traditional assets such as stocks and bonds, Bitcoin has no productivity and no cash flow. Because of this, they believe that Bitcoin is just a speculative tool rather than a real investment asset. This view has been verified to a certain extent by the market. Many people who invested in Bitcoin at its peak suffered heavy losses in the subsequent price decline.

In this context, investors need to look at Bitcoin more rationally. Although Bitcoin has certain investment potential, it is also accompanied by high risks. For ordinary investors, it is particularly important to understand the characteristics, market dynamics and potential risks of Bitcoin. Many financial advisors suggest that investors should regard Bitcoin as a small part of their portfolio rather than the main asset when allocating assets to reduce the overall investment risk.

In addition, with the popularity of Bitcoin, more and more financial institutions and companies have begun to accept Bitcoin as a means of payment. Some large companies such as Tesla and Square have successively invested in Bitcoin, enhancing its legitimacy and recognition in the market. This trend has made many investors confident in the future of Bitcoin and believe that it has the potential to become a mainstream payment method.

When exploring the issue of whether Bitcoin is an irrelevant asset, we also need to pay attention to its technical background. Bitcoin's blockchain technology is not only a form of currency, but also brings the possibility of innovation to many industries. The transparency and immutability of blockchain technology give it broad application prospects in supply chain management, financial transactions, identity verification and other fields. These applications not only provide technical support for Bitcoin, but also lay the foundation for its future development.

In summary, there is no clear answer to the question of whether Bitcoin is an irrelevant asset. It is both a high-risk speculative tool and a potential investment opportunity. For investors, the key is how to rationally view the characteristics of Bitcoin and fully understand its market dynamics and potential risks in order to find suitable investment opportunities in this unpredictable market.

Finally, with the continuous advancement of technology and the evolution of the financial market, the future of Bitcoin is still full of uncertainty. It may play an important role in the future financial system, or it may be replaced by other emerging technologies. In any case, as investors, we should keep an open mind, keep up with the pace of the times, explore new investment opportunities, and prepare for future wealth growth. Bitcoin’s journey continues, and we will see how it all plays out.

The four most famous international exchanges:

Binance INTL	OKX INTL	Gate.io INTL	Huobi INTL
China Line　APP DL	China Line　APP DL	China Line　APP DL	China Line　APP DL

Note: The above exchange logo is the official website registration link, and the text is the APP download link.

On Friday, Forbes published an article discussing whether Bitcoin is an "uncorrelated asset." The article stated that Bitcoin is not always correlated with anything. In theory, as a borderless digital asset that is not controlled by a government or central company, Bitcoin should have its own price trend, unrelated to other currencies and markets.

However, some crypto industry insiders have put forward various views, suggesting that it is correlated with traditional markets such as stocks or "safe haven" assets such as gold. The current data cannot give a definite answer, because Bitcoin's correlation seems to be constantly changing, and many experts have different opinions.

Crypto analyst Tone
Vays said this week, "I believe Bitcoin does have a correlation with traditional stock markets because they are both private assets. Bitcoin has benefited greatly from the decade-long bull market because people generally become richer and they are more willing to speculate in assets such as Bitcoin."

Vays expects that Bitcoin will bring a positive reaction in relatively uncertain economic periods, such as a country's exit from the eurozone. Because "people will be scared, but they still have jobs and they are looking for an exit."

However, he believes that the current situation is different. Vays mentioned that "when the market crashes like now, people worry about their jobs and they don't get involved in Bitcoin." He believes that as an asset that has only existed for about 11 years, Bitcoin is not yet ready to replace cash on a global scale.

Affected by the global COVID-19 epidemic and the oil price war, traditional markets have plummeted in recent days. The Dow Jones Industrial Average (DJI) has fallen more than 20% from its 2020 high, and Bitcoin has fallen from $10,500 on February 12 to around $4,000.

However, the price of Bitcoin will not always follow the traditional market. Vays believes that when the price fluctuations in traditional markets are small, the price of Bitcoin will not follow. He said, "If the stock market is not volatile, then Bitcoin is not correlated at all. When the market rises quickly or the market crashes, I believe it is correlated with Bitcoin because they are both private assets." 

Morgan Creek Digital co-founder Anthony Pompliano said in a tweet this week, "Today, Bitcoin is basically flat and the stock market is down double digits. I didn't hear anyone say "Bitcoin is correlated with the stock market" today. The fact is that it doesn't matter whether it is correlated in the short term. Bitcoin has remained an uncorrelated asset over the past months and years." 

He said, "If you look at the correlation between digital assets and the S&P 500 over the past 180 days, the correlation is zero. The most important part of Bitcoin in terms of global hedging is that it is an uncorrelated asset, which means that as stocks rise or fall, Bitcoin has no correlation with it." 

Emmanuel Goh, CEO of crypto analytics company Skew, explained Bitcoin's price behavior relative to stock market investors. A 2016 report by the National Bureau of Economic Research (NBER) showed that the richest 10% of households own 84% of U.S. stocks. Goh said that baby boomers own most of these numbers, and they have almost no Bitcoin. "And a small number of millennials who own Bitcoin also own stocks." Goh explained, "In theory, this should make Bitcoin more immune to liquidations and margin calls during the global sell-off. Given the high volatility of global markets and Bitcoin, Bitcoin only fell 10%." The article believes that as Bitcoin continues to mature, it will also gain further recognition.

In this era of rapid information change, investors' cognition is also changing. More and more young people are beginning to pay attention to digital currency and believe that it is the trend of future finance. According to statistics, tens of millions of people around the world already hold Bitcoin, and this figure is constantly rising. As the acceptance of Bitcoin gradually increases, its position in the investment market is also increasing.