Cryptocurrencies are NOT Commodities!

Okay, want to talk about this.

Cryptocurrencies are not commodities.

That was the title of a recent post on USCF Substack.

There's still maybe some confusion about this.

So, can you elaborate? >> Sure.

You know, that was kind of a fun piece we put together.

Uh, a lot of people have asking that question for a while.

Is it a commodity?

And some people consider it a commodity, others don't.

Um, one thing that's happened recently is the regulation, which was uncertain, has shifted to where crypto is starting to be regulated a little more like a commodity.

Um, but just because there's there's futures on something does not make it a commodity.

The big difference is obvious.

One is a commodity is tangible.

Uh, a cryptocurrency is is virtual.

So, that alone uh separates it.

But I I I think the main thing you want to look at is is what what differentiates an asset class, the most important thing I think is that correlation that we've been talking about and commodities give you diversification from equities, especially sort of those risk-on equities like the Magnificent 7 where cryptos have tended to correlate much more strongly with uh you know tech tech funds with technology stocks Magnificent 7.

So they're really giving you a very different exposure than commodities in general.

It's true that commodities, you know, you look across the space and cocoa and cotton and crude oil, they don't correlate with each other.

Same thing with Bitcoin, but uh when you look at them together and you look kind of the average correlation of a commodity versus crypto, you're getting a differentiation from commodities that is not the same as crypto.

So I think crypto is its own asset class.

Um Bitcoin is not a commodity.

There are futures on it.

It is regulated by the CFTC, but there are a lot of things that differentiate it.

And I think they're two different things that you can use in your portfolio for different purposes and in different ways.