The correlation between Ethereum and other safe-haven assets
The correlation between Ethereum and other safe-haven assets
Ethereum

The correlation between Ethereum and other safe-haven assets

By Marco Cavicchioli - 12 Feb 2020

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According to a study by the San Jose State University, Ethereum has no correlation with the stock market and the gold market but would be a hedge against them.

The study, carried out by Artem Meshcheryakov and Stoyu Ivanov, analyzed the intraday performance of the price of Ether (ETH) with the aim of verifying whether Ethereum’s cryptocurrency could be a hedge, a risk diversifier or a safe haven in the US. 

The conclusion is that it would indeed be an asset that could potentially be used as a hedge against the risks of the equity (S&P500) and gold markets, where ETH would tend to behave as a “safe-haven asset”

Moreover, as far as currency markets are concerned, ETH would appear to be a risk diversifier in relation to the US dollar.

These conclusions were reached by examining the relationship between the price of ETHs and the price of several other assets over a one-year period between December 2017 and December 2018. 

Actually, the period of time taken into account is not large enough to draw definitive conclusions, furthermore, December is a particular month, where profit taking is often concentrated, especially following the 2017 increases. 

Some time ago, it was also revealed that bitcoin was not correlated with any other asset, so although this is the first academic analysis to detect the same thing for Ethereum, the results of this study seem plausible. 

In fact, most of the literature on cryptocurrencies has always focused on the analysis of bitcoin and its characteristics, and the San Jose State University initiative aimed to bridge the gap between the first and second cryptocurrency in the world in terms of market capitalization. 

Ethereum: an uncorrelated cryptocurrency

ETH is actually not only a stand-alone asset, but also the native crypto of the Ethereum network, used for example to pay for the gas of transactions recorded on this blockchain, including those of ERC20 tokens, such as DAI, or those of the DeFi dApps. 

In other words, its role within the crypto sector is different from that of bitcoin, which is more used as a sort of digital gold.

 

Marco Cavicchioli
Marco Cavicchioli

Class 1975, Marco teaches web-technologies and is an online writer specializing in cryptocurrencies. He founded ilBitcoin.news, and his YouTube channel has more than 11 thousand subscribers.

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