Crypto and traditional markets KW2 – Bitcoin beats traditional markets
What good is Bitcoin and the strongly correlated crypto market as an uncorrelated asset? Are classic markets still decoupled from the crypto market? And how strong is the volatility of Bitcoin?
Size correlation and volatility are particularly important for institutional investors: a low correlation with traditional markets such as the S & P500, the DAX or the Dow Jones would confirm that the crypto market may be of interest to institutional investors. He would be helpful for a greater diversification of the portfolio. Another monitor is volatility: high volatility and the associated risk deter institutional investors.
Since the beginning of November, we have been tracking Bitcoin's impact on traditional markets. We therefore look for the correlation last month, a sliding correlation, a floating volatility and a sliding return. The last three values are calculated for each day based on the last 30 days. As the correlations within the crypto market are very similar and BTC is currently the most interesting for institutional investors, we are largely focusing on the bitcoin price.
With a decent rebound, further price losses could be avoided last year at Bitcoin, XRP and Ethereum. January started pleasantly, but the price rises on January 10 came to a sudden end. As you know it from the crypto-market, more or less all crypto-currencies fell together, so that the correlations of the top 3 hardly changed among each other:
Correlation: Cryptocurrencies vs. traditional market
Bitcoin's correlation to the classic values has barely changed since last week. The coupling to oil is strongly negative. The same can be said about the pairing with the US indices S & P 500 and Dow Jones. Overall, the correlation to all assets is currently negative:
As a result of these negative couplings, the mean correlation is by far the lowest for Bitcoin in all markets considered.
Couplings to gold and the DAX are weakest, while the correlations to the S & P 500 and Dow Jones indices and the correlation with oil are strongly negative:
Sales increase volatility
The volatility of Bitcoin continues to be significantly higher than that of other assets, but has fallen to almost 0.04 percent. Of course, the sell-off on January 10 has also increased volatility:
The crypto-investor likes to see that: The monthly performance is significantly higher than that of all comparison assets. Although it has fallen again a few days ago, but still at least three times as high as the traditional markets:
Currently, Bitcoin is an asset that is extremely attractive to institutional investors: high returns, falling volatility and high anti-correlation to traditional markets. No wonder recently Bill Miller, the CIO of the hedge fund Miller Venture Partners, commented positively on Bitcoin.
Data based on cryptocompare.com, finance.yahoo.com and fred.stlouisfed.org
Be sure not to miss any important news related to Cryptocurrencies! Follow our news feed in the way you prefer; through Twitter, Facebook, Telegram, RSS or email (scroll down to the bottom of this page to subscribe). Bitcoin never sleeps. Neither do we .
Síguenos en Telegram