Bitcoin as an alternative to cover the risk of the stock market

Some virtual economists and researchers refer to this currency as digital gold

The recent coronavirus outbreak has had large-scale consequences that go beyond the spread of the disease. For March 9, 2020, the Dow Jones Stock Indices recorded a -7.8 % drop, which turned out to be the worst loss in history.

Previously, another decline had been generated, considered the fifth largest in modern history in percentage points by a staggering amount of almost 10 %. Unfortunately, the losses did not stop there. Four days later, on March 16, the Dow Jones hit a new record of nearly 13 %.

According to the analysis carried out by some economic specialists, the ability of bitcoin to cover the risk of the stock market has been surprising to such an extent that economists consider it as digital gold.

Although some studies argue that bitcoin is designed to face the risk of catastrophic events only in the cryptocurrency markets and not the eventual risk with respect to other asset markets, it has generated an extreme and consequent impact named by the Lebanese researcher and financier, Nassim Taleb, as the “Black Swan”.

In summary, it can be concluded that bitcoin is exposed to the risks of extraordinary catastrophic events in other asset classes such as stocks, and in this way it has been possible to observe its recognized potential.


Source: cointelegraph

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