Bitcoin a stable investment? Volatility drops under Nasdaq, S&P 500

Bitcoin a stable investment? Volatility drops under Nasdaq, S&P 500

A silver stripe on the latest sideways trend from Bitcoin is that the cryptocurrency is now on new territory: Bitcoin's volatility is relatively low compared to the stock markets.

According to data from Kaiko, Bitcoin's volatility has fallen under that of the NASDAQ and the S&P 500 share index for the first time since 2020. Today Bitcoin's volatility has dropped by more than 40 % compared to the most volatile point this year in February.

On Tuesday, the volatility index (Ticker VIX) from CBOE, a measure of the course fluctuations of the S&P 500, moved just under 30, which is the generally accepted brand for increased uncertainty, risk and fear in the markets. The VIX has increased by almost 13 basis since the beginning of the year.

The Nasdaq-100 volatility index (Ticker Volq) has been on the rise this year. It has increased by more than 90% since the beginning of the year.

"In the first half of 2022, cryptocurrencies reacted very strongly to macromark events such as the publication of inflation data, interest rate increases and stock market volatility," said Clara Medalie, head of research at Kaiko. "The correlation of Bitcoin with Nasdaq and the S&P 500 shot at all -time highs in spring when the global financial markets entered a phase of high volatility."

cryptocurrencies in total have generally become less reactive to the publication of sensitive economic data, added medal, which could explain the general decline in volatility compared to the stock markets.

The correlation coefficient from Bitcoin to the S&P 500 has moved between 0.5 and 0.6 in the past three months, which is relatively high in comparison

"It is likely that 'digital gold' [Bitcoin] can decouple and act independently like gold," wrote Dan Morehead, CEO and Co-Chief Investment Officer at Pantera Capital, on Tuesday in a note. "In the first increasing interest rate environment for 42 years, there will be a wish to invest in things that no longer have to decrease if the Fed dissolves its double errors."

The interest decision of the Federal Reserve next month could bring crypto again again, but dealers are generally optimistic about Bitcoin.

"At these levels we see value in Bitcoin; either it becomes a coverage against geopolitical and macroeconomic uncertainties, or it becomes a high-beta-asset again," said Jon de Wet, co-founder and chief investment officer of the digital-asset company Zerocap.

Bitcoin tends to reverse the movements of the US dollar currency index (DXY), which has been in a strong upward trend since March. While this long-term trend remains intact, the dynamics of the dollar recently slowed down because it decreases and tests a range of support between 110 and 111, which coincides with its sliding 50-day average.

If the dollar turns down, risk systems could benefit.

"One thing is certain, volatility tends to mean reversal - and long -term volatility strategies are worth a look," he said.

In other words, the persistent period of volatility contraction that the cryptoma markets have experienced in the past few months will probably give way to a volatility expansion at some point. And as in the case of a constantly winding spring: the longer the volatility is steamed, the stronger the movement - up or down - is likely.

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The article Bitcoin as a stable investment? The S&P 500 first appeared at Blockworks.