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Binance Research: Bitcoin Moderately Correlated with S&P500 in Q1


A new report from Binance Research discusses Bitcoin’s performance and correlation compared with many traditional asset classes during the first quarter of 2020, following the recent global market downturn mainly driven by the COVID-19 pandemic.

Binance Research, the market research and analysis arm of Binance, found that Bitcoin showed a moderate positive correlation with US equity indexes and zero correlation with gold during the first quarter of 2020, a volatile period in the markets that included the rise of Bitcoin to above $10,000 and the subsequent steep falls in worldwide markets mainly due to the COVID-19 pandemic.

In its recently-released “How Has the Recent Market Turmoil Impacted Cryptocurrencies?” report, Binance Research looked into how Bitcoin (BTC) and other crypto-assets performed and correlated with each other during the first quarter of 2020. It also gave a special emphasis on how BTC performed relative to various traditional asset classes such as stock indexes, commodities, oil, and others.

“Due to the pandemic and the global economic turmoil, all asset prices were down in the first quarter of 2020,” according to Binance Research. “Over the first quarter of 2020, Bitcoin price was down by -10%, while the S&P500 displayed a -19% return. Their correlation was relatively high (0.57), which is explained by a similar pattern in daily business day returns.” 

Binance Research also made the following observations regarding the global market:

  • Gold displayed a null relationship with BTC by the end of the first quarter of 2020, showing a notable deviation from the initial findings by Binance Research in mid-March. The price of gold rose by 8% during the quarter, with much of the growth coming in during the second half of March.

  • On the other end of the spectrum, crude oil prices fell 66% during the quarter, albeit due to other factors, the most significant of which are downwards price pressure and the failure of the Organization of the Petroleum Exporting Countries (OPEC) to implement further oil output cuts.

On the crypto-asset front, Binance Research said that the crypto industry (represented by the CMC 200 index as the industry benchmark) faced significant headwinds during the most recent quarter. The gains recorded in January were diminished by moderate negative returns in February before the market crumble of March sealed the deal for negative market performance.

In addition, large-cap cryptocurrencies had record-high correlations so far this year. Bitcoin and Ethereum exhibited a correlation of 0.93 and a median correlation coefficient of around 0.81 with the other largest 15 crypto assets. Here are other crypto-related findings from the recent report:

  • In contrast to Bitcoin’s double-digit swoon, the price of Ethereum (ETH) maintained itself, with a minor price increase of +3.07%, during the first quarter of 2020.

  • Amid general market turmoil, some major cryptocurrencies such as LINK and XTZ showed positive quarterly gains, mainly due to project-related news and other idiosyncratic factors.

Read the full report here