Kraken’s highly anticipated March market review revealed that the correlation between gold and bitcoin has dropped to levels not seen since late 2016.
The exchange’s data released over the past couple of hours shows that gold experienced its worst first quarter in 39 years, while Bitcoin (BTC) posted double-digit gains for the sixth straight month, the longest monthly growth streak since 2013.
Kraken’s exploration manager – Pete Humiston – explained that while both gold and bitcoin are generally considered insurance against inflation, organizations can now view BTC as the best store of value.
“In the past, market participants were reluctant to own BTC instead of gold because few understood its asymmetric growth potential and its usefulness as an excellent store of value,” he said.
“While none of them offer profitability, the total BTC addressable market goes well beyond the $ 11 trillion gold market capitalization, which makes it more useful in these days when virtually every aspect of our lives is shifting from analog to digital.”
He also argued that many market participants may also be aware that BTC has tremendous promise as a new inflation hedge with growth potential, utility and relevance in both traditional financial markets and cryptocurrency markets.
“As digital assets become more familiar and convenient, we can expect BTC to grab market share from risky assets like junk bonds and stocks, as well as risk-free assets like gold,” he added. …
“This rotation is already taking place. Last month, BTC’s correlation with gold fell to a 52-month low as BTC posted its third best Q1 record in history and gold posted its worst Q1 in 39 years. ”
The intelligence dossier also revealed that …
- Bitcoin’s correlation with high-cap tech stocks turned negative for the first time since January 2020 as the cryptocurrency rallied with the dollar strengthening, ending March with its correlation with the U.S. dollar index (DXY) at a one-year high.
- NFT volumes hit an all-time high, with cumulative daily transaction volumes on the major NFT marketplaces hitting $ 34 million on March 11.
- Bitcoin’s volatility fell nearly 40 percent on a monthly basis to a three-month low, which had a negative effect on trading volumes, which fell five percent to a year-to-date low of roughly $ 255 billion.
- Ether outperformed Bitcoin with a 35 percent return in March, compared to Bitcoin’s 30 percent return. As with Bitcoin, Ethereum market volatility and trading volumes have dropped to lows since the beginning of the year.
- Historically, the second quarter is positive for the cryptocurrency market, with the average quarterly return on bitcoin being 39.5% and on ether 71%. If history repeats itself, Bitcoin could end June at $ 82,000 and Ether well above $ 3,000.
FURTHER READING: “One bitcoin on the Lambo, then one bitcoin on the Bugatti,” says Kraken boss, advising Polkadot to be the next Ethereum.