Fidelity’s Timmer Analyzes Volatility Match-Up

Alex Dovbnya

Fidelity’s Jurrien Timmer has analyzed Bitcoin’s potential as a diversifying asset in traditional portfolios

Jurrien Timmer, Fidelity’s director of global macro, has shed light on Bitcoin’s evolving relationship with traditional investment assets, positioning the cryptocurrency as a potential diversifier in modern investment portfolios. 

In a series of posts on the X social media network, Timmer analyzed Bitcoin’s correlation to the S&P 500, noting a distinct but lessening tie to equities compared to other assets. 

He suggested that Bitcoin could find its place in the alternatives (alts) bucket of the classic 60/40 investment portfolio due to its unique correlation characteristics.

Bitcoin’s correlation dynamics

Bitcoin’s correlation with traditional financial assets has long been a point of discussion among investors. 

The largest cryptocurrency still moves in tandem with equities to some degree, but it’s not as closely linked as other assets, according to Timmer’s analysis. 

Notably, Bitcoin exhibits a negative correlation with the U.S. Dollar and Treasury Bills and shows no significant correlation with gold. 

This uncorrelated behavior with gold puts into question the premise that the bellwether coin and gold are contemporaneous safe havens. Yet, Timmer views the diversification potential positively.

“Exponential gold”

According to Timmer, Bitcoin’s volatility is roughly four times that of gold, yet when adjusting for this, a much smaller allocation to the flagship cryptocurrency could equate to a larger position in gold over the past five years. 

Timmer’s analysis suggests that a blend of gold and Bitcoin could enhance the “store of value” proposition within an alternative investment strategy.

As reported by U.Today, the Fidelity executive recently referred to the digital asset as “exponential gold” due to its capacity to act as a commodity currency and a hedge against monetary debasement in the digital era. 

With attributes such as decentralization, limited supply, and censorship resistance, Bitcoin could be seen as the digital age’s answer to gold’s historical monetary role.

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Alex Dovbnya