Kraken Report Reveals April is Bitcoin’s Second Best Performing Month; Will BTC Price Jump?


Bitcoin’s annualized volatility broke a 9-month downtrend in March, states crypto exchange Kraken in its latest report.

Last month, we saw one of the biggest one-day drops in Bitcoin’s history. On March 12th, with a 39% drop, this second worst day in BTC’s history was in line with S&P 500’s 9.5% drop in response to the spreading coronavirus pandemic which was declared a pandemic by the WHO.

This has the 30-day correlation of Bitcoin and S&P 500 peaking. As such, Bitcoin’s poor performance can be explained by the weakness in the US equity and market participants chasing volatility in traditional markets, states the report.

Bitcoin’s price movement has the annualized volatility rising 178%, making it the most volatile March and the 8th most volatile months since January 2011.

April performance could be better but even more volatile

The world's leading cryptocurrency’s performance in March repeated history and underperformed February for the 6th time in a row making it the second worst March on record.

Now, looking back as far as 2011, April has been historically the second best performing month for bitcoin. On average, Bitcoin posts +53% return and highest median return at +27%.

April is also on an average 48% more volatile than March, meaning an implied annualized volatility of 263%. Typically the most volatile month, Kraken points out that this month has an average monthly annualized volatility of 102%.

What to watch for?

When it comes to bitcoin fundamentals, the hash rate of the network dropped 45% last month before closing out the month down by 20%. This decline had unprofitable miners squeezed out of the market.

“Miner exits would result in the liquidation of assets, bitcoin included. Bitcoin's halving in May could exacerbate this dynamic should price fail to trend higher.”

Before the halving next month, there are several “upcoming notable catalysts” such as US Federal Open Market Committee Minutes, ECB Monetary Policy Meeting Accounts, Bank of Japan Monetary Policy Meeting, US Reports Weekly Jobless Claims, and China Reports 10 Gross Domestic Product (GDP).

Besides these catalysts, we need to watch for the recession which the global economy remains at risk of, heightened market volatility in the traditional market, growing unemployment, falling asset values, illiquidity, worsening credit conditions, and fear that could “drive cash-strapped market participants to sell bitcoin.”

Amidst all this, long term holders remain largely unphased as over 58% of the BTC supply, accounted for in unspent transaction outputs (UTXOs), haven’t moved in more than a year.

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