Bitcoin’s 2020 Volatility Insights

In July 2020, Kraken Intelligence unveiled their Bitcoin Volatility Report, revealing a dramatic twist in Bitcoin trends over the preceding month. With trading activity plummeting 31%, Bitcoin experienced its lowest annualized volatility in six months — a staggering 51%.

The Quiet Month of June

June proved uneventful for Bitcoin, marking the quietest month since February 2020. The sharp drop in trading volume not only impacted Bitcoin’s volatility but also initiated significant shifts in its correlation with traditional assets like gold and the stock market.

Gold’s Loss as BTC Slides into the Negative

Kraken’s analysis revealed that Bitcoin’s correlation with gold took a nosedive in June, plummeting from an average of 0.24 to a four-month low of -0.49. This significant drop was a stark departure from the mildly positive correlations seen in late May.

Bitcoin and S&P 500: A Growing Connection

While Bitcoin was distancing itself from gold, it was cozily snuggling up to the S&P 500. By late June, its correlation with the index climbed to a remarkable 0.65, a noticeable increase from an average of 0.26 over the previous year.

The Implications of Increased Correlation

Daniel Koehler, liquidity manager at another exchange, echoed Kraken’s findings, highlighting the growing correlation between Bitcoin and the S&P 500. This data suggests that Bitcoin is increasingly influenced by stock market movements, invoking memories of significant market events such as the infamous March 12 BTC price crash. Some analysts argue that this rising synergy could propel Bitcoin’s price much further, potentially reaching the envisioned $18,000 mark.