Mainstream financial entities are first to see Bitcoin (BTC) as a non-correlated asset, a concept Morgan Creek Digital Co-founder Anthony Pompliano has been promoting for over a year.

"If Bitcoin is not likely to correlate to economic factors, or to traditional equities and stock-still income securities, then Bitcoin could serve every bit a portfolio diversification tool," said chief economist at the Chicago Mercantile Exchange Bluford Putnam said in a Feb. xi video on Finbold.

Bitcoin's cost does non motility in stride with traditional markets

Since Bitcoin is a new kind of borderless and decentralized nugget, information technology makes sense that it would not track the aforementioned price fluctuations seen in traditional markets, such as stocks and bonds. BTC has shown evidence for this lack of correlation several times in its history, including

Crypto skilful Anthony Pompliano, or Pomp, every bit he is known on social media, has expressed this concept for years.

"The near important role of Bitcoin, when information technology comes to the global hedge, is the fact that it's a non-correlated asset — meaning that, every bit stocks go upwardly or down, Bitcoin doesn't have correlation to that," Pomp told Cointelegraph in an earlier interview.

Traditional market managers are merely catching on now

Over the years, various people have knocked Bitcoin equally a viable stable portfolio option due to the asset's wild price fluctuations. In spite of Bitcoin's volatile cost action, however, Putnam said the coin's lack of mainstream correlation might get in a valuable, admitting minor, addition to portfolios.

"Since Bitcoin is highly volatile, only a very small allocation — say, 2% of the portfolio — might reduce risk if the lack of correlation holds," Putnam said.

Putnam is referring to a typical hedge-blazon portfolio, which unremarkably holds 60% stocks and xl% fixed income assets, such every bit bonds. Historically, this percentage allotment has proven itself stable in value during nigh economic situations.

According to 2022 experimentation, Putnam said adding two% Bitcoin to the mix slightly reduced overall take a chance. Putnam explained:

"The portfolio for potential diversification also shows up in how Bitcoin prices might behave if geopolitical events destabilize traditional markets and created uncertainty."

In August 2022, Pompliano forecast that Bitcoin would make its manner into all institutional portfolios eventually.

CME declined to expand on Putnam's comments for this article. Cointelegraph reached out to Pompliano for additional details but received no response as of press time. This commodity will be updated accordingly should a response come up in.