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An Uncorrelated Asset
Bitcoin is on yet another volatile, but upward, trajectory. My friends and family insufferably know that I’m a bitcoin champion because of my incessant preaching to them about the virtues of personally-secure money. They also know I’m a long time lover-of-bitcoin, not a skanky shitcoin shill who popped up out of nowhere overnight.
I’ve seen smart people describe bitcoin as an “uncorrelated” asset for quite some time now. Until very recently I thought it strange of them to say that. I look up the price of BTC daily and it seems qualitatively clear to me that bitcoin is positively correlated to the S&P 500 index. Every time the index goes up, BTC seems to go up. Every time the index goes down, BTC goes down.
Fidelity Research helped me understand why calling bitcoin an “uncorrelated” asset is quantitatively correct. The effort of Ria Bhutoria (Director of Research at Fidelity Digital Assets) dotted an “i” and crossed a “t” in my previously infallible mental model of the emerging role of bitcoin in the world. I snipped the following elegant table from her latest thesis (“Bitcoin’s Role As An Alternative Asset“) to record the correlation coefficients between the top financial assets in the world.
The first column clearly shows that bitcoin, like honey badger, don’t care about what other assets do. Unlike any of the other listed assets, none of bitcoin’s correlation coefficients cross the .2 threshold. Interestingly, bitcoin is less correlated to its biggest competitor, gold, than it is to stocks.
An uncorrelated asset like bitcoin is the best hedge against a global financial system crash that deflates the value of all other assets except for, perhaps, gold. But there’s no need to worry about that, right?
The Thing
At last month’s MRI follow up with my neurosurgeon, my sky high stress level was instantaneously deflated when he said “no change“. Specifically, there was no progression or regression in the sizes of those three fugly tumors in my brain.
Since I knew at the time that my next chest/abdomen/pelvis CT scan was scheduled for this month, my stress levels started ramping up once again in a parabolic frenzy (just like Bitcoin’s price action). 🙂
This morning I had the follow up with my primary oncologist to review the results of the CT scan I had yesterday. My stress level was instantaneously deflated once again when he said “no change” just like my neurosurgeon did last month. Also, similarly, there was no progression or regression in the sizes of the four fugly tumors in my right lung.Â
The Emperor Of All Maladies hates the phrase “no change“. That means his blood thirsty orc soldiers are still being held at bay by my ex$pen$ive savior, Opdivo.
My beloved wonder drug has also kept the EOAM frozen in a virtual block of ice like that monstrous abomination in John Carpenter’s “The Thing“.
So, all is well inside my mind for now my dear readers. My stress level has returned to its baseline value of “phew!”, and the slope of my stress-vs-time curve has been reset to zero. It’s time for the groundhog day cycle to restart: wash, rinse, repeat.
A Double Dose Of Joy
Today is a great day! To celebrate another glorious 24 hours above ground, I’ve prepped a mid afternoon snack for Morrie and me. A pair of tasty pork rinds for my beautiful boy and a double dose of anti-anxiety meds for dad.
Why am I here?
WTF?
Meh!
D'oh!
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