Bitcoin’s 180-day volatility is at a record low of around 46%, which is typically bullish for prices. However, the deviation of Bitcoin from the Nasdaq 100 since Q1 may indicate weakness in all risk assets if stocks pull back. Mainstream acceptance could lead Bitcoin to resemble gold or Treasuries in the future. In the immediate future, Bitcoin’s lagging returns compared to tech stocks could continue if the equity market experiences seasonal volatility and the Federal Reserve continues to raise interest rates. For silver, only a recession-driven surge in gold may push it past its resistance level of $30. Silver is expected to regress to its post-2008 average of $20 due to economic indicators from China and the U.S. yield curve inversion. The correlation between gold and silver prices is usually consistent, with divergence being uncommon. Bitcoin is now seen as riskier compared to stocks, with its volatility three times higher than the Dow Jones Industrial Average. Bitcoin’s correlation with equities may pressure it if there is a stock retreat, and it may struggle to surpass the $30,000 level if equities decline.
Hot Take: Bitcoin’s low volatility and potential resemblance to gold or Treasuries in the future are positive signs. However, the deviation from the Nasdaq 100 and the risk of a stock retreat could impact Bitcoin and other risk assets. It will be interesting to see how Bitcoin’s relationship with stocks evolves and if it can overcome these challenges to continue its growth.
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