Bitcoin Was Uncorrelated With Major Assets, Experienced Low Volatility in 2019
Bitcoin loved a close to 100 % worth acquire over the course of 2019, but it surely in any other case had a tame yr to spherical out the last decade. 2019 was additionally the yr that bitcoin’s worth actions broke away from the remainder of the cryptocurrency pack — and it continued to current itself as an uncorrelated hedge to macro monetary belongings.
All of that is in response to SFOX, a cryptocurrency buying and selling platform which simply launched its finish of the yr volatility report. In addition to highlighting the truth that bitcoin’s worth almost doubled final yr, it keys in on different market traits that talk to a comparatively quiet yr in the business.
A Quiet Year for Bitcoin, Uncorrelated With Traditional Investments
The notion that 2019 was quiet for cryptocurrencies is marked by the truth that volatility was hushed throughout the board. Over the course of the yr, bitcoin’s customary deviation from its 30-day common worth was 9 % in response to SFOX, decrease than the earlier yr and far decrease nonetheless than 2017’s bull market. Most different high cryptocurrencies shared this low volatility except for ETC, whose month-to-month common was 35 %.
Even with dampened volatility, bitcoin nonetheless outpaced all different main cryptocurrencies in worth beneficial properties for 2019. Its 93 % returns outdated gold (18 %) and the S&P 500 (29 %).
On high of beating these two conventional belongings on returns in 2019, SFOX additionally discovered that bitcoin’s worth actions are largely uncorrelated with each gold and the S&P 500, one thing that ought to make it engaging for threat diversification, the agency believes.
“Combined with the fact that BTC is proving to be largely uncorrelated with both the S&P 500 and gold (average 30-day correlation values of -0.037 and 0.149, respectively, in the last 6 months), these data about Bitcoin’s high returns and low volatility made BTC a compelling tool for portfolio management in 2019,” per the report.
Additionally, “the most recent crypto correlations data show that BTC has a much lower positive correlation with BCH, BSV, and ETC than typical,” SFOX reported.
When taken in mixture, this information has moved the needle on SFOX’s market outlook from impartial to barely bullish. The water’s a bit too murky to be overly optimistic, SFOX believes, however an in any other case profitable 2019 — and the upcoming 2020 block reward halving — provides it sufficient motive to at the least chorus from being outright bearish.
“Part of the multifactor market’s current neutral rating may be due to the fact that the crypto market appears to be entering a new decade to a number of potentially impactful yet difficult to evaluate factors,” SFOX reported. “BTC choices merchandise are starting to roll out at venues like Bakkt, OKEx, and the CME, however the lukewarm preliminary reception of Bakkt, which we noticed this previous September, leaves it unclear whether or not the institutional urge for food for such merchandise is de facto there but. Another halving of the Bitcoin mining reward is scheduled for this coming May, main some to speculate about whether or not BTC’s worth will rise in anticipation of the diminished fee of latest provide, as has been the case in the previous.”