How do Bitcoin and Ethereum fare against global currencies in 2022
Historically, the cryptocurrency industry has been more volatile than equities or forex markets. However, since COVID, most investible assets have experienced increasing volatility. Interestingly, following the previous mini-budget, the pound plunged at one of its steepest rates in history, whilst Bitcoin has remained pretty constant around the R343K market.
The correlation between stocks grows
The link between stocks such as the S&P 500 and Bitcoin is expected to increase dramatically throughout 2022. The data below illustrates that the correlation is nearing all-time highs, nearly doubling that of 2020.
While the connection between the S&P 500 and Bitcoin has been decreasing since early October, it is still around 0.57. However, how has Bitcoin fared versus major currencies such as the US dollar, British pound, Euro, Japanese yen, and others?
Comparisons with worldwide fiat currencies in October
Since October 7, Bitcoin and Ethereum have fallen by 2.85% and 3.85%, respectively. The British Pound, Euro, Chinese Yuan, and Israeli Shekel all plummeted to 1.37%, while the US Dollar, Australian Dollar, Japanese Yen, and Canadian Dollar all gained to 0.65%.
Thus, the data shows that volatility in the crypto markets is slightly higher than in the conventional currency market, but not by as much as some may assume. A global fiat currency losing 1.37% of its value in 14 days is concerning, but for Bitcoin, a 2.85% drop is modest in comparison to what many are used to witnessing.
Comparisons with world fiat currencies on a quarterly basis
The chart for the fourth quarter of 2022 (since August) provides a more comprehensive picture of the situation. The most volatile currency in Q3 has been Ethereum, while the US dollar has been relatively flat and has continuously climbed since late August.
Over the period, Bitcoin has had a greater decline than Ethereum, albeit with less volatility. Since mid-September, the volatility of all other currencies has followed a similar pattern.
Comparisons with worldwide fiat currencies during the entire year
When the full year is reviewed, the US Dollar is the clear winner, with a 16.97% growth in value and a consistent increase in price without much volatility. The Russian Ruble has gained 21.09% year to date after falling as high as 45% in March. The ruble has had an incredibly tumultuous year, but it is ending the third quarter in the black.
