Just a Little Lower? Kraken Releases April 2020 Bitcoin Volatility Report

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Kraken Intelligence, our team of in-house research experts, has officially released our Bitcoin Volatility Report for April 2020.

Key Takeaways

  • Bitcoin (XBT) posted its best monthly return (+35%) in nearly a year, while trading volume and volatility fell -21% and -59%, respectively.
  • After trending higher since Nov. 2019, bitcoin’s annualized velocity declined -12% month-over-month to hit a 2020 low; the drop suggests network activity failed to keep pace with the +35% rally off of March’s 10-month low of $6,422.
  • Bitcoin’s 30-day rolling correlation with gold and the S&P 500 fell substantially after exhibiting a strong positive correlation in March. Bitcoin’s 30-day correlation with the S&P 500 declined to 0.59 and to a 6-week low of 0.30 with respect to gold.
  • Mid-way through the month, bitcoin surpassed its 50-day simple moving average for the first time since February 26; Then, on April 29, bitcoin crossed over its 200-day simple moving average for the first time since March 8.
  • Bitcoin finished the month $1,400 shy of its psychologically significant $10,000 resistance, a level that coincides with a multi-year pennant pattern formation.

What to Watch for Next:

  • Gains and volatility ahead? Historically, May is one of bitcoin’s least volatile months, with an average annualized volatility of +79%. May is also the third best performing month with an average return of +39%.
  • Eyes on $10,000 – This is an important level psychologically, and if price reaches and holds above this level, it could mark the break of a multi-year macro downtrend.
  • Bitcoin’s Hashrate – Although it recovered nicely in April, market participants should pay close attention to mining activity, as a pullback could signal incremental miner capitulation and thereby send price lower.
  • COVID-19 – Continued uncertainty surrounding the coronavirus and its impact on the global economy will likely keep traditional financial markets on edge, and this fear may also trickle into bitcoin.