Analysts from the Skew research team, which studies cryptocurrency derivatives trading, has unveiled surprising statistics. They compared Bitcoin (BTC) and crude oil price volatility for an annual profile.
As volatile as Bitcoin (BTC)
According to their calculations, in a majority of 24H frameworks year-to-date, the Bitcoin (BTC) price moved less than 2%. Such a small absolute daily return has been demonstrated by the king coin 53% of the time.
Is #bitcoin always volatile? Not so fast!— skew (@skewdotcom) May 27, 2020
Bitcoin had an absolute daily return of less than 2% more than half the days over the last year
53% of days to be exact vs 61% for crude oil for instance pic.twitter.com/gJdYV6CPfE
Comparably, the crude oil price experienced insignificant volatility 61% of the time, which is only 8% higher than that of Bitcoin (BTC).
Additionally, the vast majority of days of high-volatile for Bitcoin (BTC) were in only three periods YTD. The price skyrocketed during the bull run of Summer, 2019 and the early days of Q4, 2019 due to the 'Xi Spike'.
Also, the Black Thursday tragedy and its aftermath in March 2020 contributed significantly to the calculations of Bitcoin (BTC) volatility.
Decoupling or correlation?
During the ongoing market recession, many economists, traders and analysts have attempted to figure out the laws of correlation between Bitcoin (BTC) and the prices of classic assets (i.e. stocks, raw materials, metals and others).
The most accurate explanation has been given by Charles Edwards of Capriole Investments. According to his 'Amygdala Overdrive Relationship' law, Bitcoin (BTC) is correlated with assets only in times of big fear and big greed:
When markets are in Extreme Greed: investors are attracted to risky assets and Bitcoin performance correlates with equities, or when markets are in Extreme Fear: investors dump risky assets and Bitcoin performance correlates with equities.
His take is shared with the legendary John Bollinger who suggested that all assets are highly correlated during 'Black Swan' events
VanEck's Gabor Gurbacs has also highlighted that Bitcoin (BTC) demonstrated an unprecedented correlation with Gold (XAU) during the initial stage of the ongoing recession.