Bitcoin's volatility falls below Nasdaq and S&P 500's for first time since 2020


A cryptocurrency price crash and the onset of a new so-called “crypto winter” has left many companies in the industry facing a liquidity crisis.

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While bitcoin’s price is stuck lately, there is one good thing to come from it for investors betting on crypto to become a legitimate asset class: It’s less of a wild ride.

After hovering in the $19,000 level for more than a month, bitcoin’s volatility is now lower than that of both the Nasdaq and S&P 500, according to Kaiko.

The data provider said Friday that the cryptocurrency’s 20-day rolling volatility has now fallen below that of the stock indexes for the first time since 2020. On Monday it had fallen enough just to match the Nasdaq’s volatility. That’s welcome news to many longtime crypto investors who hope that a mellowing of crypto’s notorious price swings could bring less fear to potential new investors.

Kaiko also said the gap between bitcoin’s and equities’ 30-day and 90-day volatilities has been shrinking since the middle of September, even with bitcoin’s heightened sensitivity to macroeconomic data releases. (Though bitcoin’s correlation with stocks has eased, it remains high and its price continues to be driven by macro themes.)

“Bitcoin volatility is at multi-year lows while equity volatility is only at its lowest level since July,” Clara Medalie, head of research at Kaiko, told CNBC. “Equity markets have certainly been volatile over the past few months due to high inflation, an appreciating dollar, rising interest rates, and the ongoing war and energy crisis. The data suggests that cryptocurrency markets are less reactive to volatile macro events than they were earlier on in the year, whereas equity markets have remained highly sensitive.”

On Friday bitcoin fell below the $19,000 level, following a brief spike in the dollar index and as the 10-year U.S. Treasury yield rose to a 14-year peak. It rebounded a bit, and has been over the flat line since.

The bitcoin price was last lower by less than 1% at $18,966.00, according to Coin Metrics. Earlier in the day it fell as low as $18,677.50. Ether fell less slightly too and was trading at $1,283.80, after finding an earlier low of $1,254.80.

On Friday the U.S. 10-year Treasury yield rose as high as 4.308% for the first time since 2008 but pulled back after a report that some Federal Reserve officials are concerned about overtightening with rate hikes. The dollar index also briefly jumped to a session high of 113.906 before losing most of its gains.

The two largest cryptocurrencies by market cap are on pace to post a down week and their third negative week in a row, in what is historically a strong month for crypto returns. For the month, bitcoin and ether are down about 1% and 3%, respectively.

“Even though we have seen some signs of declining housing market demands and slower inflation this week, the market is on high alert for next month’s FOMC meeting and ignoring those economic data that could justify a more cautious approach to rate hikes,” said Yuya Hasegawa, crypto market analyst at Japanese crypto exchange Bitbank.

“We will likely not see any big movement until the meeting,” he added. “However, the area around $19,000 will likely continue to be a support for the price of bitcoin.”

—CNBC’s Christina Cheddar Berk contributed reporting



Image and article originally from www.cnbc.com. Read the original article here.

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