The day crypto assets replace gold as a traditional safe haven for investors has yet to arrive, says research from TD Economics, as the value of crypto appears to depend on many of the same drivers as equities. It says so far, the crypto market has failed to provide investors with any shelter from the downside in traditional assets and macroeconomic risks. “Equity markets went through a substantial correction over the first half of 2022 and cryptocurrencies went along for the ride,” it says. While crypto assets had lower correlations with equity markets when economic growth was strong and interest rates were low, as the economic environment deteriorated, crypto proved highly correlated with the stock market. This suggests that cryptocurrencies, like equities, are a growth-linked asset and investing in them is an investment in future economic growth. The report shows there has been near-zero correlation between returns on gold and the major crypto assets so they have yet to demonstrate their potential as a form of “digital gold” that provides a safe haven for investors.
- PWC