According to Kraken’s August report, a US-based cryptocurrency exchange, September will bring negative Bitcoin returns.
As the report claims, September turned out to be Bitcoin’s worst-performing month, with an average return of -7%. It’s evident that Bitcoin has underperformed its average returns for most months of 2020. However, September’s performance was the worst.
Despite the bearish outlook for the short-term, the report identifies some optimism. For example, a record share of Bitcoin’s supply did not change in more than 12 months. Kraken reports: “historically, this dynamic has prognoses a new bull market.” According to the reports, Bitcoin will probably see aggressive fluctuation as the markets move further away from July’s local low or “suppressed pocket.”
Bitcoin’s annualized volatility decreased between 15% and 30% before increasing to 140% and returning +196% over 94 days.
By the end of August, 38 days passed after the volatility low of 23% set on July 24, with volatility gaining to 44% and price boosting 25%.
we may have ample room for higher volatility
The report also mentions that history indicates that we may have ample room for higher volatility and gains in the months ahead. The company also notes that September has historically produced the weakest volatility on average, suggesting bitcoin may not see accelerated volatility until the fourth quarter of 2020.
However, Kraken’s crystal ball is not a reliable guide to future events. It was predicted that on August 10, a Bitcoin rally of between 50% and 200% was imminent.
According to the report, August also witnessed Bitcoin’s connection with the gold hit a new maximum of 0.97, before sharply declining to 0.25.
Bitcoin similarly produced a high correlation with the S&P 500 during the most August. After posting a local top of 0.84, the correlation between Bitcoin and the S&P 500 decreased to minus 0.02, suggesting that Bitcoin may be breaking away from the legacy markets’ meta-trend.