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BTC Pulse 2025-05-14 17:04:00

Bitcoin More of a Portfolio Diversifier Than Safe-Haven Asset, Says RedStone Report

Bitcoin’s Function as a Hedge Under Question Bitcoin’s correlation with the U.S. equity market is too volatile for it to be deemed a safe-haven asset, new research from blockchain data analytics company RedStone Oracles has concluded. The report concluded that Bitcoin has a strong negative correlation with equities in the short term, but that the correlation differs over longer time horizons. Whereas a true hedge would have a correlation of less than -0.3, RedStone’s 30-day analysis shows Bitcoin’s correlation with the S&P 500 moving between -0.2 and 0.4—too unstable for dependable counter-movement during periods of market stress. Bitcoin’s Strong Point is Diversification Even if it doesn’t make it as a hedge, Bitcoin provides enormous value as a portfolio diversifier. The cryptocurrency’s active price movement can provide upside potential when other assets fare poorly. “Even a small 1–5% Bitcoin allocation can greatly enhance a portfolio’s risk-adjusted returns,” said Marcin Kazmierczak, RedStone co-founder and COO. He noted that Bitcoin has delivered over 230% annualized return over the past five years, outperforming the performance of traditional equities and safe-haven assets. BTC Maturity Tied to Institutional Adoption In Kazmierczak’s opinion, Bitcoin must “mature” further to delink from stock markets and serve as a good hedge. “More institutional adoption will certainly help,” he said, referring to the impact of corporate treasury investments and endorsements by firms like BlackRock in reducing Bitcoin’s volatility. Recent statistics affirm this trend. Bitcoin weekly volatility hit a 563-day low on April 30. In early May, its realized volatility dipped below that of the S&P 500 and Nasdaq 100, reflecting a shift in investor attitude towards Bitcoin as a long-term investment vehicle. Conclusion Bitcoin is not yet the safe-haven asset that some investors hope for, but its maturation into lower volatility and broader acceptance is causing it to be a high-performing component of diversified investment portfolios. As its institutional acceptance grows, so too may its ability to behave more like traditional financial assets—delivering both resilience and return.

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