Vol Reduction 📉
Volatility is often seen as a barrier to Bitcoin adoption by institutions.
According to a report on Bitcoin's volatility, JP Morgan stated that 'volatility acts as a headwind towards further institutional adoption.' However, that same report notes that this volatility is in a sustained downtrend. It has been tamed considerably since then.
It is also in a sustained downtrend over the first quarter this year. So, what this shows is that not only has Bitcoin being less volatile over the past 3 months.
📉 Fall in Correlation 📉
There used to be a high correlation between Bitcoin and Equity prices. Correlation is important because it can help to hedge out porftolio risk. If you hold assets that have a low correlation with each other, it means that they won't move together. This is according to the Modern Portfolio Theory of Investing.
Bitcoin's correlation with the likes of Equity markets has been on a sustained downtrend since the beginning of the year. This is the case not only with the historical but also for the forward looking or "implied volatility". This means that it has become a good hedge for the likes of traditional equity.
There has also been a reduction in the correlation with the likes of Gold and the Dollar. This means that it is it's own asset class that is completely unrelated to these other traditional assets. Given the negative correlation with the USD it means that this could act as a complete dollar depreciation hedge.
🏢 Goldman & MS 🏢
Morgan Stanley & Goldman Sachs have both been really sceptical on Bitcoin in the past but have completely changed their tact.
Here is what MS was up to:
- 13 Feb: Counterpoint Global
- 17 Mar: Bullish Wealth Management Report
- 19 Mar: Potentially Purchasing Bithumb
- 1 Apr: Mutual Fund Approvals
- 1 Apr: SEC Filing
Goldman Sachs has said that they are developing products so that their wealthy investors can invest in Bitcoin. These funds will help them invest in Bitcoin.
🤔 Could BlackRock Enter? 🤔
BlackRock is the largest asset manager in the World with over $7.3 trillion in assets under management. In early December of last year the CEO was stating that Bitcoin could possible "evolve" into a global asset.
In December it was reported that BlackRock was on the lookout for a VP Blockchain lead to "drive demand" for the firm's crypto offerings.
The BlackRock Chief Investment Officer is also bullish. In an interview that he did with CNBC in February he said that BlackRock has started to "dabble" in Bitcoin. They have also started investing in these according to the most recent filings.
Given how large BlackRock is, if they were even to invest 1% of their Total AuM into Bitcoin it could be monumental. It is also important from a signaling perspective as it could be a sign to other global managers
