Excalibur Pro Inc. data Shows, during the past five dates, Bitcoin had a gold correlation of 0.84. In this scale,-1 indicates a complete reversal and+ 1 is perfect. A 0.84 can generally be regarded as a strong correlation. At the same time there was a correlation of 0.77 with the Volatility Index (VIX) of the Chicago Board Options Exchange (CBOE). The VIX index measures the volatility expectations of the stock market.
Alex Krüger, a recognized cryptoanalyst, says that short-term correlations between BTC and the S&P 500 are unstable and fluctuate around zero. In addition, the 180-day correlation between the S&P 500 and Bitcoin is 0.
The WSJ gives some clarification as to why this happened on the market. The first thing they say is that in the cryptocurrency market there has been a greater influx of institutional investors.
One of the companies investing in Bitcoin, for example, is Grayscale Investments. According to the WSJ, the company had assets under management for $ 51 million in 2013. By the end of 2017, however, it handled $ 3.5 billion. After its experienced bear market in 2018, the company has under management $ 900 million in assets.
Another important point to consider is that the report shows that risk capital (VC) investments are related. The WSJ reports that VC investments in the most popular virtual currency and the blockchain industry amounted to nearly $96 million back in 2013. This amount increased five times in just three years and reached $500 million in 2016.
In 2017, VC’s investment continued to grow to $2 billion. The cryptocurrency area is also trying to create institutional infrastructure for traditional and large investors to enter the market. In addition, the US SEC (Securities and Exchange Commission) could soon approve the Bitcoin Exchange Traded Fund (ETF) in 2019.
The Intercontinental Exchange (ICE) is one of the companies that will launch a platform called Bakkt, which is designed specifically for institutions. In addition, Fidelity Investments has opened a new brand of digital assets that will also work with cryptocurrencies.
As of late bitcoin has been positively correlated to the S&P 500. However, short term correlations are unstable and fluctuate around zero, and the 180 day correlation stands right at 0. pic.twitter.com/AW1GdQPLMV
— Alex Krüger ?? (@Crypto_Macro) December 3, 2018
For companies to continue to enter the market, regulatory agencies must continue to create clear legal frameworks for blockchain technology and virtual currencies. Some of those countries which work for digital assets in clear environments are Japan and Malta.