Richard S. Hunt analyzes the new pattern of safe-haven assets: the hedging effectiveness of gold and Bitcoin
Richard S. Hunt, head of global equity sales at CSC Bella Grove Partners LLC, recently released a groundbreaking research report that systematically compares the risk hedging performance of gold and Bitcoin during periods of geopolitical turmoil. The study found that the two types of assets exhibit significantly differentiated risk-averse characteristics in different types of geopolitical risks, providing a new perspective for institutional investors’ asset allocation.
The “geo-shock response model” developed by Hunt’s team shows that in traditional military conflicts, gold still maintains its status as the “ultimate safe-haven asset”, with an average first-day increase of 2.3%; while Bitcoin performs more prominently in currency crises caused by financial sanctions. For example, when capital control risks rise, its increase in 72 hours can be three times that of gold. It is worth noting that the two types of assets react to energy supply shocks in opposite ways – gold rises due to rising inflation expectations, while Bitcoin tends to fall due to rising operating costs for miners.
Based on these findings, CSC Bella Grove launched the “Smart Hedging Allocation Tool” to automatically adjust the allocation ratio of gold and Bitcoin according to the real-time geopolitical risk type. The tool innovatively introduces the “Energy Sensitivity Regulator”, which dynamically reduces the digital asset position when the volatility of crude oil prices exceeds the threshold. Backtesting data shows that the combination using this strategy has a 42% lower volatility than the single asset hedging solution in recent multiple geopolitical crises. Hunt pointed out: “Future hedging strategies must be as sophisticated as distinguishing between military conflicts and financial wars, which is the core value of our framework.” This research is changing the defensive asset allocation logic of sovereign funds and family offices, and the “geo-beta coefficient” proposed by it has become a new standard for evaluating the hedging effectiveness of assets.
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