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Bitcoin’s Correlation with Equities on the Rise
Kaiko Research recently reported that Bitcoin’s correlation with equities has been steadily increasing. The 90-day correlation reached 0.17 last week, a significant jump from the multi-year low of 0.01 recorded in March. This data underscores the evolving relationship between Bitcoin and traditional financial markets.
Bitcoin’s Correlation Trends
The latest research from Kaiko highlights the shift in Bitcoin’s correlation with risk assets. Despite the recent rise, the current 90-day correlation remains below the high of 0.6 seen during bullish market conditions. Interestingly, Bitcoin has maintained a near-zero correlation with the European equities index STOXX 600 since the start of 2024. Additionally, the correlation with China’s CSI 300 equities index has remained negative, standing at -0.14 at the beginning of the year.
Adoption in Brazil
The Kaiko report also sheds light on the growing adoption of cryptocurrencies in Brazil. The Brazilian crypto market has witnessed a significant surge in trading volume, surpassing that of the US dollar. Between January and early May 2024, the trading volume in Brazilian real (BRL) reached $6 billion, solidifying Brazil’s position as the largest crypto market in Latin America and the seventh-largest worldwide in terms of fiat currency trading.
Notably, stablecoins dominated nearly half of all trading in BRL, with Bitcoin (BTC) and Ethereum (ETH) together accounting for 43% of the total trade volume. The report indicates a 30% increase in BRL trading volumes compared to the previous year, with BRL volumes outpacing USD volumes since the beginning of the year.
Additional Insights from Kaiko
In addition to the correlation trends and adoption in Brazil, Kaiko’s research report provided further data and analysis on key developments in the crypto market:
- The divergence in prices for ETH puts and calls since March, signaling potential volatility ahead as the US SEC considers approving spot Ethereum ETFs on May 23.
- Foreign crypto ETF approvals failing to stimulate markets, as evidenced by the muted response following Hong Kong’s approval of spot Bitcoin and Ethereum ETFs in April.
- The surge in Bitcoin fees post-halving, followed by a decline after initial interest in the Bitcoin Runes Protocol. Reduced fees could lead to selling pressure among crypto mining companies, potentially impacting the overall market.
Overall, Kaiko’s comprehensive research provides valuable insights into the evolving dynamics of the cryptocurrency market, highlighting correlations with traditional assets, adoption trends in key regions like Brazil, and the impact of regulatory decisions on market behavior.
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