Morgan Stanley and Goldman Sachs both offer exposure to Bitcoin (BTC) as Bitcoin volatility and correlation to other assets diminishes
2021 is so far an amazing year for the growth of cryptocurrencies. Yesterday, the total market capitalisation of all cryptocurrencies surpassed the $ 2 trillion mark for the first time, having reached $ 1 trillion just three months ago in January.
Bitcoin has by far the largest market share with 1.1 trillion US dollars. Now it has also managed to trade for an entire week with a market capitalization of over $ 1 trillion and will continue to do so as long as its price remains above $ 53,566.
According to data from Glassnode the transaction volume has increased in step with price, suggesting that Bitcoin’s bull market is justified and that it can maintain these levels. 10.6 % of the circulating offering (1.98 million BTC) traded above the $ 1 trillion mark, making it one of the strongest on-chain supports since the Bitcoin price was between $ 11,000 and $ 12,000.
Another promising sign is that Bitcoin no longer seems as unpredictable as it used to be. Last week, it was trading within a relatively narrow range of 5.4%, while its realized volatility over six months, according to a report by Bloomberg has stabilized at about 73%.
This is relevant because most institutional investors have been reluctant to invest in an asset that can rise or fall by up to 30% in a single day, despite Bitcoin’s impressive profits.
In addition, Bitcoin’s correlation with other assets. A quarterly report by Coindesk Research recently showed that the correlation of Bitcoin to gold, the US dollar and the S&P 500 has declined in recent months.
Many traditional investors already have these assets in their portfolio, and adding an additional asset with little correlation to these assets reduces the volatility of their overall portfolio. This method is also known as diversification and is a popular portfolio hedging mechanism in traditional markets.
These are all positive signals for financial institutions that could further advance the acceptance of Bitcoin. Morgan Stanley has recently announced that a number of its investment funds are being offered with Bitcoin exposure. Goldman Sachs will also soon offer Bitcoin investments to its asset management customers.
As Bitcoin becomes increasingly popular as a diversification investment, a new wave of institutional acceptance could be imminent.