Analysts determine that Bitcoin’s volatility is not related to that of other assets. Bitcoin is not as volatile as oil, but it is more volatile than gold.
Bitcoin does not correlate with other assets such as oil and gold in terms of its price volatility index. Some market analysts say that the price changes present in current assets and those of BTC are not necessarily linked to each other. In other words, Bitcoin’s price and volatility do not depend on those of other assets.
However, this fact does not mean that the price variations between BTC and other assets may not coincide at a certain point. Therefore, it is not discarded that the behaviors of these indices may be the same at certain times. However, they may also be different by chance.
This is the view of trader and analyst Luke Martin, who adds that different opinions about the correlation of Bitcoin with other assets will always be circulating. On his Twitter account, Martin states that neither the fall nor the rise in the stocks or prices of other assets necessarily affects those of Bitcoin.
Many responses to this comment by Martin were bullish, a term defining the attitude of those optimistic about the increase in Bitcoin’s price. Some said that the recent fall in the prices of the cryptocurrency anticipated a rapid upward trend in prices after the next reduction by half of the miners’ reward, estimated to occur on May 18th.
This bullish environment, in which many analysts maintain high expectations about the rise in the price after the halving, was reported last January. Many expect that by reducing the reward for each mined block from 12.5 BTC to 6.25, the price will rise due to the lower availability of BTC from that moment.
Oil Is More Volatile than BTC
Alex Kimani, a writer, and financial researcher, compared the data on the historical performance of oil with the current performance of this non-renewable resource. From this assessment, Kimani says that oil is currently more volatile than BTC; however, gold has had a better stock market performance than BTC since last year.
Last February 10th, the Index of West Texas Intermediate (WTI), a type of crude oil that serves as a reference to establish the price of oil, marked a historical price volatility value of 105.3%. In contrast, the historical volatility of BTC is 42.3%, the lowest since last September, according to Skew Markets, provider of data on cryptocurrencies.
Considering that, the author notes that this does not indicate where the price will go in a long period of time. However, it shows the range of oscillation in which an asset varies its price concerning its standard price.
He adds that, late in January this year, the all-time volatility of the WTI index increased from 38.7% to 119.6%, while the S&P 500 index recorded an increase of 15.6% during the same time.
The all-time volatility of gold in early January this year doubled to 18%, before returning to 10% in early February. In other words, having reached its highest all-time volatility, gold is still considerably less volatile than Bitcoin, which proves that the most popular cryptocurrency is still the best option to invest.
By Alexander Salazar