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With the S&P 500’s volatility growing to level that of Bitcoin, we thought you may be interested in some original data and insights from CryptoCompare showing how digital asset markets are riding out the storm.
Below, we’re looking into how top cryptocurrencies are performing compared to the US market’s benchmark index.
Bitcoin’s Volatility Declines
We are seeing a flight to safety and the ultimate sanctuary in this climate has been the US dollar drawing capital from emerging market countries – with those whose economies are reliant on natural resources left especially vulnerable.
The Fed printing dollars to have a balance sheet of over $6 trillion as well as the IMF offering SDRs means that the dollar supply is going up.
- Year-to-date, the S&P 500 is down 13.9%
- Over the same period, Bitcoin is down 3.3%
- Gold moved up 13.6% since the year started
The charts below are showing that the crypto market is down more than the S&P which is off its peak by 20%. Volatility shows the clustering effect and correlation amongst cryptocurrencies with 7-day volume sharply jumping.
Inflation Is Coming
When the tide goes out, all boats sink and that’s what we have seen in this initial phase of the crisis. Bitcoin and digital currencies have been affected to a similar degree in the short term like traditional equity markets. But in the mid to long term, we might see some shifts when investors start to look at future scenarios as the dust settles. One thing is clear – inflation is coming. So TIPs, gold and utilities are the traditional ports of call – Bitcoin also fits the mold.
Highly leveraged companies will be in trouble in the short term without the ability to pass through rising costs. So the S&P will be a mixed bag where some companies will be…