• Bitcoin maintained a low correlation of 0.11 with the S&P 500 and a negative correlation with the DXY index in Q1 2024, suggesting its potential as a portfolio diversifier.
• Bitcoin’s volatility has been decreasing since January 2020, with peaks becoming less pronounced, indicating its maturation as a major asset class.
• The report highlights Bitcoin’s impressive 69% return in Q1 2024, outperforming most traditional asset classes.
The recent Glassnode and Coinbase Institutional report provides an in-depth analysis of Bitcoin’s correlation with major asset classes in Q1 2024.
Bitcoin’s impressive Q1 2024 performance
In Q1 2024, Bitcoin (BTC) posted an impressive 69% return, outperforming most traditional asset classes. This was despite the launch of BTC ETFs, which many thought would increase Bitcoin’s correlation with traditional finance assets.
Low correlation with major asset classes
The report shows that Bitcoin negatively correlated with the DXY index and gold, while its correlation with the S&P 500 was low at 0.11. This suggests Bitcoin’s price movements are largely independent of traditional markets.
Negative correlation with DXY
However, at the start of Q2, BTC is down 15% from its highs, coinciding with the DXY index rising above 106. This further highlights the negative correlation between the two assets.
Decreasing volatility
The report also noted a decrease in Bitcoin’s volatility since January 2020, with peaks becoming less pronounced. Although volatility currently sits just under 60%, the report emphasizes a long-term downward trajectory despite occasional spikes mainly in 2020 and 2021. As Bitcoin matures into a major asset class, its volatility is expected to continue declining over time.
Conclusion
Overall, the Glassnode and Coinbase report provides evidence that Bitcoin maintains a unique market path, with minimal correlation to major asset classes like the S&P 500. Its potential as a valuable portfolio diversifier is highlighted by the negative correlation with the DXY. Meanwhile, Bitcoin’s volatility is on a long-term downtrend as it continues to mature.
