HomeCryptoBitcoinKaiko: Bitcoin and Nasdaq united by volatility

Kaiko: Bitcoin and Nasdaq united by volatility

Bitcoin is often correlated with the behavior of the S&P 500, but this correlation seems to be decreasing in favor of the Nasdaq, according to Kaiko’s study. 

Kaiko report: correlation between Bitcoin and Nasdaq increases

From the quarterly report prepared by the company, 17 October 2022 the cryptocurrency par excellence in recent times has always had a correlation with the S&P 500 index, but this time similarities bring it closer to Wall Street’s other major index.

In fact, the main index of the New York Stock Exchange, the Nasdaq seems to have some things in common with Bitcoin.

US inflation data created jolts and caused the stock market in general to first veer sharply lower and then recover.

The expected figure was 8.1%, but the result was slightly higher than expected: 8.2%.

Despite the fact that the cost of US consumer prices (excluding food and energy costs) hit a 40-year high, inflation, while higher than expected, continues to fall from 9.1% in the last figure.

For its part, Bitcoin followed the behavior of the stock exchanges and thus also of the Nasdaq and other major indexes by going below $18,000 touching a new low from December 2020 to date but then just as described above for the stock exchanges it recovered ground. 

The psychological threshold of $20,000 could reinvigorate Bitcoin and induce it to rise again even if talk of a bull run is taboo, an ascent would indeed be possible.

The volatility that had marked the markets in recent months also seems to have diminished and that of BTC has fallen to the level of the Nasdaq for the first time since 2020.

The 30- and 90-day volatility has fallen like that of the equity sector despite the fact that between equities and Satoshi’s currency, the latter is much more susceptible to the macroeconomic news that often preoccupies markets these days.

Another issue is that of the performance of the US fiat currency, the strong US dollar has already done a lot of damage in the export sphere but how does this translate on the performance of Wall Street.

A strong currency has caused the Standard & Poor 500 and the Nasdaq to drop 13% one and 10% the other from September to now that is when this trend has been most pronounced.

Bitcoin and crypto adoption grows

In the meantime, BTC has seemed more resilient to the strong dollar, but the thing is true generally speaking as both are a commonly acclaimed store of value when things get bad.

Bitcoin meanwhile is becoming more and more established in the world so much so that by now it is no longer a rare thing to find indications certifying it is possible to make payments in commercial establishments (the most mainstream example being Mc Donald’s), and now Google Cloud has also joined the club.

Google Cloud, in fact, will allow payments via Bitcoin and other cryptocurrencies (Ethereum, Dogecoin, etc.) starting next year.

Even the largest US custodian bank in the world, BNY Mellon, has opened up to BTC by launching custody services for investment companies, and platforms such as Solana DeFi Mango Markets have even had $100 million in growth.

The spread, which is the difference between BTPs and German BUNDs in the case of cryptocurrencies, represents the premium/discount between the price of BTC in local currency in US dollars with the currency’s hourly exchange rate and is affected by exchange rates, demand, and the performance of other crypto assets. 

This figure in the markets of the Kingdom of King Charles III ranges between -0.1% and +0.1% so a minimal range, while in the Japanese market between -0.2% and +0.2% with a range double that of the old continent.

Major currency pairs

The highest level of volatility between GBP/USD and JPY/USD has been reached and has not been seen since March 2020 accomplice to a super dollar that has led the British pound (GBP) and the Japanese yen (JPY) to hit all-time lows against the US currency triggering even more the aggressive monetary policy made of rate hikes by the US Federal Reserve.

Despite the heavy hand of Powell and associates, the Fed has failed to defeat inflation, by all accounts, this is falling slightly with a dollar that nevertheless continues its run. 

The USD/JPY closed last week at 148.74, a three-decade low and well above the Bank of Japan’s intervention level of 145.7 in September.

After the big scare triggered in the markets by the news that the inflation figure even if narrowly missed analysts’ expectations generating great volatility first downward and then recovering perpetual futures showed correlation on all sides of the globe.

The data on the cryptocurrency sector

Binance, the large crypto exchange platform as a result of closed positions due to large price changes, recorded a drop of 7.5k BTC, while OKX perhaps moving to the news case increased its volumes against the trend of other virtual currency exchange platforms.

A drop in open contracts of more than 100,000 ETH at the same time as a minimal increase in trades saw ETH futures skyrocket on Binance, which is also recording an unprecedented increase in BTC spot volume following the cancellation of trading fees for 13 BTC pairs in July.

While BTC’s dominance grows unabated and reasonably after the temporary shadow caused by the Hype for the Ethereum Merge, average daily volumes of Bitcoin-related investment products fell in October as institutional demand for risky assets declined.

Grayscale Bitcoin Trust (GBTC), for example, saw the steepest drop ever in trading volumes going from about $400 million in January to about $30 million last week, and the trend remains the same when looking at GBTC’s Assets Under Management (AUM) dropped as much as 60% since January 2022 as did the discount to NAV which hit 37%.

The daily volumes of the first US-based BTC futures ETF – ProShares Bitcoin Strategy (BITO) which was the first BTC futures ETF in the States, also dropped between US$40 million and US$80 million.

The Short ProShares Bitcoin ETF (BITI) on the other hand, while boasting of being a new product with greater appeal at least at this stage, allows for betting against the cryptocurrency, but despite this it remains thinly optioned with average volumes hovering around US$26 million daily and an AUM around US$90 million that although up 30% has not lived up to expectations.

George Michael Belardinelli
George Michael Belardinelli
A former corporate manager at Carifac Spa and later at Veneto Banca Scpa, blogger and Rhumière, over the years he has become passionate about philosophy and the opportunities that innovation and the media make available to us, in particular the metaverse and augmented reality