S&P 500 Negatively Correlated with Bitcoin and Leading Cryptocurrencies, More So Than Gold: SFOX

  • Traders viewing bitcoin as hedge against global market, “perhaps even more so than gold”
  • The SFOX Multi-Factor Market Index has moved from mildly bullish to neutral
  • Bitcoin was the only major crypto-asset with positive month-over-month returns

Bitcoin has reclaimed $12,000 level, but the SFOX Multi-Factor Market Index— which has been mildly bullish as of July 9th, is neutral.

The latest SFOX August Volatility report suggests that we may be seeing “broader macroeconomic uncertainty” affecting the market's outlook on the cryptocurrency sector.

It provides the other side of the coin as it states, with many uncertain about the impact of rising tariffs and the global currency instability on the market, the same could be the case for crypto where traders are equally unsure of crypto’s future.

Bitcoin Increasingly Wax as Traditional Markets Wane

Still, Bitcoin is maturing as a hedge against global market instability, as traditional markets and global economy faces the challenge of ongoing US-China trade war, the report reads.

Bitcoin price climbed more than 7% s the yuan fell to a new ten-year low on August 5th and a China court ruled that Bitcoin constitutes virtual property in mid-July.

These acceptances suggest that some traders, both in the US and China, view Bitcoin as a safe haven during the ongoing chaos in the global market.

The flagship cryptocurrency has proven itself to be “the dominant cryptocurrency that increasingly appears to wax as traditional markets wane.”

Bitcoin Is The Only Major Crypto-Asset With Positive Month-Over-Month Returns

Moreover, the S&P 500 is currently negatively correlated with all leading cryptocurrencies viz. BTC, ETH, BCH, LTC, BSV, and ETC, notes the report.

Interestingly all of these crypto-assets were more negatively correlated with the S&P 500 than gold. This indicates, traders may increasingly be viewing cryptos as a hedge against the global market, “perhaps even more so than gold.”

Bitcoin is ruling the market, as it is the only major crypto-asset with positive month-over-month returns, meaning the

“market is coalescing around Bitcoin as a store of value in tumultuous global economic conditions.”

The volatility of the most major crypto assets, the report states formed a relatively tight band in the past 30-days. Altcoins volatility is actually following BTC, expect for BSV which is relatively independent of the lading cryptocurrency.

In the coming days, the crypto market has to closely watch the developments in trade war and CME bitcoin futures last-trade date on August 30th.

Crypto volatility typically moves around the time of futures expirations and with CBOE backed off,

“CME’s futures expirations may potentially impact volatility more than usual.”

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