Bitcoin is lauded as an “uncorrelated asset” in terms of how it performs compared to popular stock indices like the S&P 500 and other traditional financial markets.
Recently, Bitcoin had shown some correlation with gold, strengthening the safe haven narrative that has been at the forefront of 2019. But Bitcoin has also shown correlation with another hot commodity adored by millennials: avocados.
Bitcoin and Haas Avocados Show Correlated Price Movements
How Bitcoin correlates to other markets is among one of the asset’s biggest selling points with institutional investors. The mostly uncorrelated asset is the perfect way to derisk a portfolio steeped in traditional assets like stocks, forex, or commodities, even despite all the risk associated with the asset class’s notoriously wild price volatility.
Bitcoin has surprisingly recently started to show an unusual correlation with one particular commodity loved by millennials. Bloomberg financial journalist Tracy Alloway shared a chart comparing the price of Haas Avocados, side-by-side with Bitcoin’s chart.
My proprietary avocado-based quant model says Bitcoin has further to fall. pic.twitter.com/jnzg05SDMt
— Tracy Alloway (@tracyalloway) October 10, 2019
Both appear to have dragged along a bottom in early 2019, only to skyrocket in value starting in early April. The price of each asset rose steadily in the second quarter of 2019, but topped out in late June and early July, and has since started to decline back to previous lows.
If there really is a true direct correlation to be made, another sharp drop on avocado’s charts suggests that Bitcoin has much further to fall.
Are Millennials Behind the Unusual Commodity Correlation?
The value of Bitcoin, commodities like avocados and gold, or any financial asset for that matter, are driven primarily by supply and demand. Bitcoin’s scarce supply and an increased demand in early 2019 helped drive up the price of the asset to recent highs around $14,000 before it was rejected.
Avocados, however, had a tough growing season, and the supply diminished as a result over the summer. Restaurants raised prices on guacamole, and memes of millennials hoarding avocado toast spread across the internet with light speed.
Could the correlation between avocado and Bitcoin actually be driven by millennials’ spending habits? Avocados are among millennials’ favorite food choices, due to the healthy fats, fiber, and nutrients the fruit provides, and Bitcoin is the millennial and Gen Z investor’s asset class of choice for many reasons.
It’s extremely unlikely that the two assets are actually correlated, but it’s interesting to see the connection between two things that millennials are particularly infatuated with – avocados, and crypto. Now if Netflix subscriptions, vapes, and smartphones begin to trend alongside Bitcoin and avocados, millennials may truly be to blame.
Featured image from Shutterstock
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