The Impact of Bitcoin ETF Approval on Bitcoin's Hedging Properties Against Traditional Assets

Yihan Hong, Hengxiang Feng, Yinghan Wang and Boxuan Li

Papers from arXiv.org

Abstract: The approval of the Bitcoin Spot ETF in January 2024 marked a transformative event in cryptocurrency markets, signaling increased institutional adoption and integration into traditional finance. This study examines Bitcoin's changing relationships with traditional assets, including equities, gold, and fiat currencies, following this milestone. Using rolling correlation analysis, Chow tests, and DCC-GARCH models, we found that Bitcoin's correlation with the S\&P 500 increased significantly post-ETF approval, indicating stronger alignment with equities. Its relationship with gold stabilized near zero, while its correlation with the U.S. Dollar Index remained consistently negative, reflecting its continued independence from fiat currencies. These findings offer insights into Bitcoin's evolving role in portfolios, implications for market stability, and future research opportunities on cryptocurrency integration into traditional financial systems.

Date: 2025-12
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