Kraken has identified a declining correlation between Bitcoin and traditional financial markets.
A report published by Kraken, one of the leading cryptosystems exchanges in the United States, has identified signs that the correlation between Bitcoin (BTC), the dollar and the legacy markets continues to weaken.
Kraken’s September volatility report found that Bitcoin (BTC) has largely maintained a negative correlation with the US dollar index (DXY) since May, despite a brief coalescence between the two markets in early September.
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Bitcoin’s Correlation with the 30-Day US Dollar Index: Kraken
The report attributes the divergence of the BTC dollar to the U.S. Federal Reserve’s plan to keep interest rates at zero percent until at least 2023, in addition to declining growth rates. Meanwhile, Bitcoin has shown a positive correlation with the euro since May.
The report indicates that although there was a minimum 8-month correlation between the BTC and the S&P 500 earlier this month, the correlation would increase later as both markets experienced lateral consolidation.
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Bitcoin’s correlation with gold has remained positive since mid-July, with both markets experiencing downward pressure in recent weeks.
Bitcoin’s 30-Day Correlation with Gold: Kraken
Looking ahead, Kraken anticipates that Bitcoin will have a stronger performance in October than in September, and this would be consistent with the trend exhibited in eight of the past nine years.
The report predicts that October will drive an 11% gain for BTC, suggesting that Bitcoin will close the month at $11,850, a 3% gain from current price levels. However, Kraken indicates that Bitcoin has underperformed its monthly average for six of the nine months so far in 2020.
Kraken’s mild optimism is exceeded by bullish calls from two respected analysts. Former hedge fund manager Raoul Pal recently revealed that he has transferred more than half of his personal investment portfolio to Bitcoin in anticipation of massive institutional adoption:
„From what I know of all the institutions, from all the people I talk to, there is a huge wall of money coming into this.
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And Alex Saunders of Nugget’s News, compared the current system in mid-2017 and predicted that the institutional appetite for Bitcoin would likely trigger a „dramatic rise:
In an update to his subscribers last night, he said:
„Exchange-traded companies [and] legendary investors are singing from the rooftops about this new asset class at a time when there is record money in bank accounts looking for a house.