Saturday , January 23 2021

Crypto and traditional markets KW45 – When Bitcoin meets oil

If you are listening to the great promises of the rescue of Tim Draper and other Permabullens, there is a common thread: Institutional investors are coming big money into Bitcoin and crypto currencies. No wonder, therefore, that there is very little follow-up of the DIP back and forth in relation to the ETF. In fact, for a few years the crypto market has been enriched with new narrative: Bitcoin is not just a currency or a stored value, but an uncorrected asset. This low correlation with traditional markets such as S & P 500, DAX or Dow Jones suggests that Bitcoin and other cryptcute currencies are a good diversification tool. The benefits of diversification are low and fall with correlation.

Another factor worth considering is institutional investors: cryptoscope volatility. High fluctuation rates at the end of 2017 and early 2018 were a sign of a very speculative market. This was also interesting for traders, but such investment is less suitable for long-term institutional investment. Falling volatility, especially Bitcoin, is another monitor that is worth the effort.

In this new column we want to track these two variables weekly. We look at the correlation of last month, sliding correlation and floating volatility. The last two values ​​are calculated for each day based on the last 30 days.

Correlation: Cryptovalues ​​versus traditional market

The correlation matrix shows that Bitcoin, Ethereum and XRP had a low correlation with the traditional market in October, with Ripples' crypts being the strongest. The largest 3 crypto currencies are similar to gold, which is even slightly anticorrosive with all imaginative means:

Since Bitcoin, Ethereum and XRP are very similar, and currently BTC is most interesting to institutional investors, we focus on the first of all crypt valued.

A look at the current monthly correlations between Bitcoin and the traditional market shows that the correlation of cryptovalues ​​with the S & P 500, DAX and Dow Jones correlates and grows with gold and oil. So far the values ​​are too low to achieve the right trend:

Adjustment or disinterest? Bitcoin volatility at lower temperatures

The sinking volatility of Bitcoin has already been the subject of many topics on BTC-ECHO. Namely, in October it reached a low level and only slightly above the oil level:

Although Bitcoin is still well above gold, at the end of November, the fall is almost below the oil level. Likewise, the volatility of the S & P 500, DAX and Dow Jones indexes has almost risen to the level of Bitcoin. Is it only associated with the bears market or are cryptovalues ​​defined as the institutional class of property? This will show the future, it is interest anyway. And if the crypto sector continues to be so uncorrelated, this interest will continue to increase.


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