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Binance Research Finds Bitcoin Correlated to Stocks — But Not For Long

In a new report Binance Research discovered a’moderate’ positive correlation between Bitcoin and US equities during the first quarter of 2020 — but was connected to gold.

Bitcoin was down 10percent over the quarter but still outperformed the S&P 500 that experienced a 19percent fall. According to the report, the significance was rather high at 0. 57, as exhibited through similar patterns in daily business day returns.

Gold and long-term treasuries revealed no connection to other niches as they climbed by 8 percent and 23 respectively.

The fantastic news for hodlers is the Binance Research analysts concluded their report by saying:

“Despite Bitcoin demonstrating a substantial positive correlation with US equities in the first quarter of 2020, this high correlation coefficient stays very unlikely to persist in the medium to long term.”

This mirrors the analysis from the CEO of Pantera Capital Dan Morehead, who told investors that already talking Bitcoin’s correlation with stock market drops only lasted for the first couple of months.

Additional correlations

Bitcoin and Ethereum, demonstrated a record-high correlation using a speed of 0. 93. Just a few of the most significant cryptocurrencies bucked this trend, such as Connect and XTZ, which showed overall positive profits primarily due to project particular developments.

The report feeds into the continuing debate about if Bitcoin is or isn’t an uncorrelated asset. Bitcoin proponents have been disappointed to see BTC moving in tandem with conventional markets during the crisis — though there have been some indications recently Bitcoin could be treading a more independent route.

Since many altcoins are connected to Bitcoin, and Bitcoin is connected to traditional markets, this may indicate most altcoin are correlated with conventional assets.

Market crash

The crypto sector (represented by the CMC 200 indicator as the market benchmark) showed strong indications of support throughout the first quarter, prior to the pandemic. Gains recorded in January of nearly 30percent were diminished by average negative returns in February before the market crash of 46percent in mid-March in the annual high.

Immediately following the crash, the indicator stabilized before heading on a recovery trend which has lasted to date, raising nearly 30 .

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