Intelligence dossier finds Bitcoin is outperforming gold, but Ethereum is outshining Bitcoin

Kraken’s highly-anticipated March Market Report has revealed the correlation between gold and Bitcoin has fallen to levels not seen since late 2016. 

Released within the last couple of hours, the exchange’s data shows gold suffered its worst first quarter in 39 years, while Bitcoin (BTC) enjoyed its sixth consecutive month of double-digit growth – its longest monthly upward streak since 2013.

Kraken’s intelligence manager – Pete Humiston – explained that while both gold and Bitcoin are generally considered inflation hedges, institutions may now be regarding BTC as a better store of value.

“In the past, market participants were reluctant to own BTC over gold because few understood its asymmetric upside and its utility as a superior store of value,” he said.

“While neither offer yield, BTC’s total addressable market extends far beyond gold’s $11T market cap, giving it greater utility in today’s day and age where virtually every aspect of our lives is shifting from analogue to digital.”

Huge prospects

He also claimed that many market participants may also be realising that BTC has huge prospects as an emerging inflation hedge with upside potential, utility, and relevance in both traditional financial markets and crypto markets.

“As more become familiar and comfortable with digital assets, we can expect BTC to capture market share from risky assets, such as junk bonds and stocks, as well as risk-off assets, like gold,” he added.

“This rotation is already taking place. Last month, BTC’s correlation with gold slumped to a 52-month low as BTC posted its third best 1Q in history and gold posted its worst 1Q in 39 years.”

The intelligence dossier also found that…

  • Bitcoin’s correlation with large cap tech stocks went negative for the first time since January 2020 as the cryptocurrency moved up with a strengthening dollar, finishing March with its correlation to the US Dollar Index (DXY) at a one-year high. 
  • NFT volumes hit an all-time high, with aggregate daily transaction volumes across the primary NFT marketplaces hitting $34 million on March 11.
  • Bitcoin’s volatility fell nearly 40 per cent month-on-month to a three-month low with a knock-on effect on trading volumes, which fell five per cent to a year-to-date low of approximately $255 billion. 
  • Ether outperformed Bitcoin with a 35 per cent return in March, compared to Bitcoin’s 30 per cent return. Like Bitcoin, Ether’s market volatility and trading volumes both fell to YTD lows.  
  • Historically, Q2 is positive for the crypto market with Bitcoin’s median quarterly returns at 39.5 per cent and Ether’s at 71 per cent. Should history repeat itself, Bitcoin could finish June at $82,000 and Ether at well above $3,000.