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Bitcoin distances itself from gold

Bitcoin distances itself from Gold

As Bitcoin distances itself from Gold, BTC correlation with gold is diminishing more and more. The asset’s correlation with stock market indices, S&P 500 in specific, is on the rise, researchers from Kraken exchange found.

Kraken Intelligence, a research arm of major United States cryptocurrency exchange, Kraken, released a “Bitcoin Volatility Report” for June 2020. This somehow contradicts the previous speculations that BTC- Gold correlation is going to get stronger.

Bitcoin’s volatility hits a 6-month low

Published on July 9, the new report outlines a 31% drop in Bitcoin trading that resulted in a six-month low of Bitcoin’s annualized volatility, which accounted for 51% in June.

According to the report, the significant decline in volumes and volatility marked June as the quietest month since February 2020. This also caused a major trend reversal that greatly impacted Bitcoin’s correlation with stocks and gold.

Bitcoin distances itself from gold

As such, Bitcoin’s 30-day rolling correlation with gold plunged below its one-year average of 0.24. It hit a four-month low of -0.49, according to the research’s findings. The correlation move followed a modestly positive trend in May that ended above a one-year average of 0.50.

Bitcoin’s 30-day rolling correlation with gold
Bitcoin distances itself from Gold while at the same time embraces stock market indices like S&P 500 more.

Bitcoin’s 30-day rolling correlation with gold. Source: Kraken Intelligence

Bitcoin is embracing S&P 500 more

While Bitcoin is becoming less correlated with gold, the cryptocurrency’s correlation with stock market indices like S&P 500 is growing. According to Kraken Intelligence, the reversal trend caused Bitcoin’s correlation with S&P 500 to climb to as high as 0.65 in late June. The monthly average surged at 0.52 from a one-year average of 0.26, the analysts noted.

Kraken’s data on S&P 500 correlation appears to coincide with information shared by digital asset exchange, OKCoin, earlier this week. Daniel Koehler, liquidity manager at OKCoin, told Cointelegraph that the exchange witnessed “high” levels of BTC and S&P 500 one-month realized correlation. “The last time we saw SPX and BTC 1M realized volatility spread this low was just prior to the March 12th BTC price crash,” Koehler added.

Earlier in June, stock-to-flow analyst PlanB claimed that a heavy correlation between Bitcoin and S&P 500 should have sent Bitcoin’s price to $18,000.

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