The Federal Reserve Bank of Kansas City called bitcoin a high-risk asset and added that cryptocurrency is not a safe haven or digital gold.

In a publication released on April 15, the Kansas City Federal Reserve Bank is debating whether bitcoin can be considered a safe haven and an analogue of gold in digital format. The conclusion of the American central bank branch is not something unexpected. According to the note, bitcoin is a risky asset to become digital gold and be considered a safe haven.

“In recent years, some have questioned whether Bitcoin could also serve as a safe haven. We compare the behavior of government bonds, gold, and Bitcoin from January 1995 through February 2020 and find that the 10-year Treasury note behaved like a safe haven consistently, gold occasionally, and Bitcoin never. During March 2020, however, none of the assets can be classified with confidence as a safe haven.”

To assess the asset’s ability to act as a safe haven, the authors of the report examined the correlations of daily returns of 10-year treasury bonds, gold and bitcoins with the daily returns of the S&P 500.

According to the study, bitcoin during periods of “stress” shows a positive correlation with the S&P 500 benchmark demonstrating a significant level of 5% and higher, while US treasury bonds and gold showed negative correlations with the benchmark in similar periods.

Bank experts admit that “theoretically” a fixed volume of bitcoin emission based on algorithms allows it to be independent of traditional markets, which can make it a welcome asset in times of economic stress. They cite the results of last year’s poll, during which the owners of bitcoins said they consider it to be like gold, not stocks, US dollars or “new technology”.

"Overall, our results suggest that the 10-year Treasury has generally exhibited safe-haven behavior, gold has occasionally exhibited safe-haven behavior, and Bitcoin has never exhibited safe-haven behavior since its introduction. Moreover, the introduction of Bitcoin does not appear to have materially changed the safe-haven properties of government bonds or gold. Instead, Bitcoin at times appears to have behaved more like a risk asset than a safe haven."