Although Bitcoin (BTC) continues to move in the same direction as conventional markets, it has shown increasing resistance to rising yields and a stronger US Dollar over the past few weeks.
What’s more, Bitcoin’s rolling volatility over 20 days has now fallen below that of the S&P 500 and the Nasdaq equity indices for the first time since 2018, according to data published by Kaiko on October 24.
In particular, Bitcoin’s volatility often falls below that of the Nasdaq, which is comprised of riskier tech stocks and tends to have a stronger association with the cryptocurrency market.
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Notably, crypto trading analyst TechDev noted on Twitter the closest connection between BTC and Nasdaq weekly Bollinger Bands; he said:
“$BTC / $NASDAQ weekly Bollinger Bands are the tightest in #Bitcoin’s entire history. Price vs. NASDAQ peaked at BTC’s last impulse top in April 2021 and has been consolidating during the 1.5 year correction.”
TechDev also expects an “upside break and strong Bitcoin outperformance soon.”
FX volatility remains high
While Bitcoin maintains its low volatility, FX volatility has risen to post-pandemic highs. Despite its early October decline, the Yen’s volatility has more than doubled since March as the Bank of Japan’s aggressive monetary easing has persisted.
Meanwhile, the British Pound (GBP) had the most significant volatility increase in September due to the UK government’s fiscal stimulus initiatives, which prompted a sell-off in British assets. The notable rise in Bitcoin volumes on UK markets may be attributed to traders taking advantage of significant FX volatility in September.
It’s also worth mentioning, Finbold reported on October 24 that despite unfavorable macroeconomic headwinds and a stagnant crypto market, Bitcoin has managed to outperform equities and most major fiat currencies in the third quarter of 2022, except the US Dollar Index (DXY).
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