Kaiko: Bitcoin and Nasdaq united by volatility

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

Kaiko Report: Correlation Between Bitcoin and Nasdaq Increases

From quarterly report prepared by the company, October 17, 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 shocks and led to the stock market in general first swinging sharply downwards and then recovering.

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

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

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

The psychological threshold of $20,000 could give Bitcoin new life and make it rise again, although talk of a bull run is taboo, an ascent would indeed be possible.

The volatility that has characterized the markets for the past few months also seems to have lessened and BTC has fallen to the level Nasdaq for the first time since 2020.

30- and 90-day volatility has fallen as for 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 the markets these days.

Another problem 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 affect the performance of Wall Street.

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

Bitcoin and crypto adoption is growing

Meanwhile, BTC has appeared more resistant to the strong dollar, but things are generally true, as both are a widely recognized store of value when things turn bad.

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

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

Even the largest American custodian bank in the world, BNY Mellonhas opened up BTC by launching custody services for investment companies, and platforms such as Solana DeFi Mango Markets have even had 100 million dollars 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 rate and is affected by exchange rates, demand and the performance of other cryptoassets.

This figure in the markets of King Charles III varies between -0.1% and +0.1%, so a minimal range, while in the Japanese market it is between -0.2% and +0.2% with a range that is twice as large as on 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 complicit in a super dollar that has seen the British Pound (GBP) and Japanese Yen (JPY) reach all-time lows against the the US currency triggers even more the aggressive monetary policy created by interest rate hikes from the US central bank.

Despite the heavy hand of Powell and associates, the Fed has not been able to defeat inflation, by all accounts it is falling a bit with a dollar that nevertheless continues to run.

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

After the big scare triggered in the markets by the news that the inflation figure, although it narrowly missed analysts’ expectations, generated great volatility first downwards and then recovered perpetual futures showed correlation on all sides of the globe.

The data on the cryptocurrency sector

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

A drop in open contracts on more than 100,000 ETH while a minimal increase in trades saw ETH futures skyrocket on Binance, which also recorded an unprecedented increase in BTC spot volume after cancellation of trading fees for 13 BTC pairs in July.

While BTC’s dominance is growing unabated and reasonable after the temporary shadow caused by the hype for Ethereum Mergeraverage daily volumes of Bitcoin-related investment products fell in October as institutional demand for risky assets fell.

Greyscale Bitcoin Trust (GBTC)for example, saw the steepest ever drop in trading volume from around $400 million in January to around 30 million dollars 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 and the discount to NAV which reached 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 US, also fell between USD 40 million and USD 80 million.

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