President Donald Trump’s commercial war has introduced significant volatility in financial markets since March, which leads investors to pursue assets that believe they provide coverage in this turbulent environment.
What is clear: Bitcoin (BTC) is not one of them, to dismay the bullish investors who have long thought about the largest cryptocurrency as digital gold, either as a value store or an investment for paradise. The reality is that since the beginning of the commercial war, Bitcoin has corrected more closely with the Australian torque Dollar-Eye (Aud/JPY), the currency market barometer.
TrainingView data shows the 90-day correlation coefficient between Bitcoin and the AUD/JPY positive torque at the end of February and since then it has reached the highest since November 2021. The Tit-For-Tat Rate War between the two nations has led to an amazing 245% cumulative in Chinese imports to the United States, which leads to the president of the Federal Reserve The stagest stadium.
The correlation of 0.80, the maximum value is 1, is considered strong, which implies that the two variables, BTC and AUD/JPY are closely related in their movements in the same direction.
On the contrary, the 90 -day Bitcoin correlation with negative turned gold at the end of February and since then has fallen to -0.80, just above the minimum -1. It means that the two are closely related in their movements, but in opposite directions.
BTC, a risk proxy
The Australian dollar, which is sensitive to China and the local currency of a nation that exports basic products, is considered a risk currency. YEN is a safe shelter because Japan has been a net international creditor for decades with almost zero interest rates.
When global markets are optimistic and increases the demand for basic products, the AU generally appreciates, which reflects a higher risk between investors and Yen falls. The opposite is true when they become reluctant to risk.
Merchants, therefore, monitor Aud/JPY as a risk indicator, seeing bullish trends as positive signs for risk assets such as actions, and vice versa. Bitcoin, who was already emerging in a comparable paper, has strengthened his position. Correlation data indicates that BTC is now both a proxy for the feeling of risk as Aud/JPY.
