Bitcoin’s 20-day realized volatility, a measure that assesses daily price variations, has slipped below both the Nasdaq and the S&P 500 for the first time in two years, according to research published this week by crypto data startup Kaiko.
That is, the price of Bitcoin has been far less volatile in the previous three weeks. Volatility in both crypto markets and stocks had reached a 40-year high just before the 20-day period in question.
Inflation estimates from the US economy have led most of us to believe that the Federal Reserve’s terminal interest rate (the peak of interest rate rises) is still a long way off—the Fed has already raised rates by 0.75% three times this year, the first of which was the largest single boost since 1994.
Kaiko further claims that the spread between 30-day and 90-day volatility ratings for Bitcoin and stocks has narrowed since the second part of September.
Bitcoin Trading Sideways
Bitcoin saw its best moments in the years 2020 and 2021.
Perhaps due to the uncertainty in fiat currency in midst of a global pandemic – investors chose to secure their assets in the cryptocurrency in midst of a crisis around the world.
Throughout the months, BTC skyrocketed in value, reaching $66,953 in September of 2021.
However, post-pandemic, the world’s largest Bitcoin has called almost as fast as it grew in the past two years.
Today Bitcoin is trading at around the same level as before the pandemic. One of the most crucial factors for the cryptocurrency’s loss of value is due to governments like the United States, Australia, and many others investing in a raise in interest rates in order to control the nation’s inflation and ease some of the unavoidable recession.
However, not everything is terrible for Bitcoin in 2022.
Since June, the cryptocurrency has consolidated around the $20,000 mark and has been able to withstand several hits like the SEC’s several interest raise policies in the past months.
Today, the world’s largest cryptocurrency by market capitalization has the possibility of acting as a buffer against the government’s economical uncertainties.
According to statistics from IntoTheBlock’s correlation matrix, Bitcoin’s current correlation coefficient with both the Nasdaq and the S&P 500 is about 0.3. The closer this figure is to zero, the weaker the association. The closer the value is to one, the more connected the markets are.
