Bitcoin’s correlation with gold is weakening, says new report from Kraken


Although the correlation of Bitcoin (BTC) with gold has decreased, the asset’s correlation with the S&P 500 stock market index is increasing, Kraken exchange researchers found.

Kraken Intelligence, a research arm of the major U.S. crypt-currency exchange, Kraken, released a „Bitcoin Volatility Report“ for June 2020.

Bitcoin Volatility Reaches a Low of 6 Months

Published on July 9, the new report describes a 31% drop in Bitcoin trading that resulted in a minimum of six months of annualized volatility for this cryptoactive, which had 51% in June.

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According to the report, the significant decrease in volumes and volatility marked June as the quietest month since February 2020 for Bitcoin. This also caused a major trend reversal that greatly impacted Bitcoin’s correlation with stocks and gold.

BTC correlation with gold falls 0.73 on average indicators in June
As such, Bitcoin’s continuous 30-day correlation with gold fell below its annual average of 0.24 to a four-month low of -0.49, the researchers found. The correlation movement came after a modestly positive trend in the second half of May that ended above a 0.50 annual average, Kraken Intelligence said.

The analyst says Bitcoin’s correlation with the S&P 500 means that its price should be $18,000.


The correlation with the S&P 500 is growing
While Bitcoin is correlating less with gold, the correlation of the cryptomoney with stock market indices such as the S&P 500 is growing. According to Kraken Intelligence, the reversal trend caused Bitcoin’s correlation with the S&P 500 to reach 0.65 at the end of June. The monthly average increased by 0.52 from an annual average of 0.26, analysts said.

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Kraken’s data on the correlation of the S&P 500 seems to match the information shared by the digital asset exchange, OKCoin, earlier this week. Daniel Koehler, OKCoin’s liquidity manager, told Immediate Edge that the exchange witnessed „high“ levels of correlation realized over a month for BTC and S&P 500. „The last time we saw SPX and BTC 1M we realized that volatility spread so low was just before the March 12 drop in BTC prices,“ Koehler added.

In early June, stock-to-flow analyst PlanB said that a strong correlation between Bitcoin and S&P 500 should have sent the Bitcoin price to USD 18,000.