Cryptocurrency

How Bitcoin and Ethereum compare to Global Currencies so far in 2022

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The cryptocurrency industry has historically been more volatile than the stock and forex markets. However, since COVID, volatility has increased for most investable assets. Interestingly, the pound has fallen at one of the steepest rates in history following the recent mini-budget, while Bitcoin remains relatively stable in the $19,000 market.

Stocks become more correlated

The correlation between the S&P 500 and stocks such as Bitcoin is known to increase significantly throughout 2022. The chart below shows that the correlation is near an all-time high, nearly double what it was in 2020.

S&P500 BTC
Source: Coinmetrics

The correlation between the S&P 500 and Bitcoin has been declining since early October, but is still hovering around 0.57. But how did Bitcoin perform against dollars, pounds, euros, yen, and other major currencies?

October Comparison with Global Fiat Currencies

Bitcoin and Ethereum are down 2.85% to 3.85% respectively since October 7th. The British pound, euro, Chinese yuan and Israeli shekel also fell to 1.37%, while the US dollar, Australian dollar, Japanese yen and Canadian dollar rose to 0.65%.

As such, the data shows that cryptocurrency market volatility is slightly higher than traditional currency market volatility, but not as much as some might expect. While it’s alarming that the world’s fiat currencies lost his 1.37% of its value in 14 days, Bitcoin’s 2.85% drop compared to what many are accustomed to. Calm.

dxy
Source: DXY 1w, TradingView

Quarterly Comparison with Global Fiat Currencies

The chart for the fourth quarter of 2022 (August onwards) provides a broader picture of the situation. Ethereum had the most volatility in Q3, while the US dollar remained relatively flat and has risen consistently since late August.

dxy
Source: DXY 1 month, TradingView

Bitcoin experienced a bigger drawdown than Ethereum during this period, but with lower volatility. Volatility for all other currencies has followed a similar trend since mid-September.

Year-to-date comparison with global fiat currencies

Considering the year as a whole, the standout winner is the US Dollar, which saw a 16.97% increase in value, with prices rising steadily without much volatility. The Russian ruble has posted a year-to-date gain of 21.09% after he fell 45% in March. After a very volatile year for the ruble, the third quarter has been solid.

dxy
Source: DXY 1 year TradingView

Both Bitcoin and Ethereum have posted heavy losses since January, with the pair down 56.11% and 65.99% respectively. An even more accurate picture of the decline in volatility within crypto can be seen in the year-to-date charts, where the Bitcoin and Ethereum charts have had two of the smoothest lines since mid-September.

Annual drawdowns for cryptocurrencies are much worse than for traditional currencies. Of the baskets tested, the biggest losers were the British Pound, which he lost 16.87%, and the Japanese Yen, which he lost 22.21%. However, all currencies except the US dollar and the Russian ruble have followed a six-month downward trend in value.

What lower volatility means is a matter of debate. The maturity of the cryptocurrency market, the bottom of the bear market and the calm before the storm are all rational theories. However, the correlations between cryptocurrencies, stocks and global fiat markets are more consistent than ever before. As past performance is unlikely to guide traders through such an unknown period, crypto slate publishes such research reports daily. Readers can find more research reports here.

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