April 2022 Bitcoin Brief

Insights

May 12, 2022 | 3 minute read

April was a difficult month for assets across the board amidst rising rates as the Federal Reserve attempts to curb inflation.

April was a difficult month for assets across the board amidst rising rates as the Federal Reserve attempts to curb inflation. Risk assets suffered disproportionately—the S&P 500 marked its worst month since March 2020, the Nasdaq 100 delivered its worst monthly return since October 2008, and the Bloomberg Aggregate Bond Index had its worst month since inception. This capitulation in risk assets spilled over to Bitcoin as well. Bitcoin’s price broke through the $40,000 support level down to $38,325 by month end.

The May 4th FOMC statement was a large focus for investors, which, given a challenging earnings season due to slowing growth, spurred volatility in equity markets. Bitcoin volatility, however, was relatively stable. Technical factors have likely been drivers of lower bitcoin volatility; these include 1) increased institutional adoption,¹ 2) reduced regulatory uncertainty in the U.S. on the back of President Biden’s Executive Order, and 3) clarity around restrictions in China on cryptocurrencies. As a result, the ration of bitcoin’s realized volatility to that of the S&P 500 fell from 6.2 at the start of the year to 4.5 by the end of April.²

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Crypto Fund Research
NYDIG, Glassnode, Bloomberg as of 4/29/2022

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