Bitcoin’s Correlation With Gold Is Weakening, Says New Kraken Report

A drop in Bitcoin trading resulted in a six-month low of Bitcoin’s annualized volatility.

Though Bitcoin’s (BTC) correlation with gold has diminished, the asset’s correlation with the S&P 500 stock market index is on the rise, researchers from Kraken exchange found.

Kraken Intelligence, a research arm of major United States cryptocurrency exchange, Kraken, released a “Bitcoin Volatility Report� for June 2020.

Bitcoin’s volatility hits a 6-month low

Published on July 9, the new report outlines a 31% drop in Bitcoin trading that resulted in a six-month low of Bitcoin’s annualized volatility, which accounted for 51% in June.

According to the report, the significant decline 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 drops 0.73 from average indicators in June

As such, Bitcoin’s 30-day rolling correlation with gold plunged below its one-year average of 0.24 to hit a four-month low of -0.49, the researchers found. The correlation move followed a modestly positive trend in the second half of May that ended above a one-year average of 0.50, Kraken Intelligence noted.

Bitcoin’s 30-day rolling correlation with gold

Bitcoin’s 30-day rolling correlation with gold. Source: Kraken Intelligence

Correlation with S&P 500 is growing

While Bitcoin is becoming less correlated with gold, the cryptocurrency’s correlation with stock market indexes like S&P 500 is growing. According to Kraken Intelligence, the reversal trend caused Bitcoin’s correlation with S&P 500 to climb to as high as 0.65 in late June. The monthly average surged at 0.52 from a one-year average of 0.26, the analysts noted.

Kraken’s data on S&P 500 correlation appears to coincide with information shared by digital asset exchange, OKCoin, earlier this week. Daniel Koehler, liquidity manager at OKCoin, told Cointelegraph that the exchange witnessed “high� levels of BTC and S&P 500 one-month realized correlation. “The last time we saw SPX and BTC 1M realized volatility spread this low was just prior to the March 12th BTC price crash,� Koehler added.

Earlier in June, stock-to-flow analyst PlanB claimed that a heavy correlation between Bitcoin and S&P 500 should have sent Bitcoin’s price to $18,000.

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