(20 February 2021) The price of Bitcoin surged to more than $55,000 this week for the first time in history as large firms such as Tesla, PayPal, Mastercard, and BNY Mellon as well as major investment banks including JPMorgan, Goldman Sachs, and Morgan Stanley showed support for cryptocurrencies.

With increased demand from institutional investors and corporates instead of retail investors, Bitcoin's perception may be shifting to that of a more stable asset than it was a couple of years ago. On the other hand, some investors still consider bitcoin a speculative asset and think it may be one of the biggest market bubbles in history.

Moreover, there is a perception that Bitcoin is an uncorrelated safe haven asset similar to gold. It may seem that the bitcoin-gold competition has started as the largest gold ETF, SPDR Gold Trust, lost 20% in market capitalization since August 6, 2020, as gold prices decline while the Bitcoin market capitalization increased by 288% during the same period, increasing to $1 trillion.

However, bitcoin's extreme volatility is far from the volatility experienced by a safe-haven asset. Bitcoin's 10-year volatility is 10 times higher than that of gold which has historically provided low volatility relative to many other real and financial assets.

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