Bitcoin and traditional markets – Bitcoin goes its own way

The correlation of the Bitcoin price to the remaining markets reaches a new minimum. Volatility continues to hover around 3.5 percent. Unfortunately, bitcoin is the worst performer in terms of performance.

For more than half a year , we’ve been watching Bitcoin beating compared to traditional markets. It’s not about a trivial comparison of performance. Institutional investors are extremely interested in Bitcoin’s claim to be a non-correlated, stable asset. As part of a guest contribution to  € uro Fundresearch , BTC-ECHO addressed the question of whether Bitcoin and the highly correlated crypto market would be a good supplement to traditional portfolios. This question is for institutional investors to be interested in the crypto market, not so much for hoping for a new bull run as at the end of 2017. To clarify the suitability for traditional portfolios, an investor can look at different sizes:

  • the correlation between the Bitcoin price and traditional markets
  • the volatility and
  • the performance of the Bitcoin course

Therefore we pay attention in this series of articles on these three sizes. They are calculated for each day based on the last 30 days. We consider the S & P 500, Nikkei and Dax indices as well as oil and gold as comparison assets from the traditional markets.

Overall, the absolute average correlation with the other markets is 7 percent. This means that the Bitcoin price is by far the least coupled to the comparative assets on the traditional market. In the Nikkei index, the second largest relative to the absolute mean correlation, this is already 14 percent. Taking account of compensation effects, we get a similar picture: With a negative correlation to the other markets of just one percent, the Bitcoin price is the most independent of all assets, even taking into account offsetting effects.

The view is not as dramatic as in the previous week. Certainly, the performance is rather poor at the moment, but the manageable volatility and above all the great independence from the comparison markets are plus points for Bitcoin. Let’s see how such a development will affect the Bakkt Futures .