Markets were on a rollercoaster last week, with wild swings of hundreds of points on major indices. The Wall Street Journal even fired up a liveblog to provide minute-by-minute commentary on the unfolding turmoil.
Amazingly, I'm not talking about the bitcoin markets. Instead, US equity markets ended their most volatile trading week in years, with the benchmark Dow Jones Industrial Average down as much as 207 points on Friday and Brent crude oil falling below the $80 a barrel mark.
Bitcoin trading was languid by comparison. The price according to the CoinDesk BPI began the week at $375.80 and closed at $388.75.
The week's trading hit a high of $407.12 on Tuesday and a low of $370.27 on Thursday. That's just $36.85 from peak to trough, or a swing of 9 percentage points.
This wasn't lost on Everett Rosenfeld of CNBC.com, who noted the flat bitcoin price as wider financial markets' prices began to plummet on Thursday. He wrote:
"While US equities markets tank, and gold is hanging near a one-month high, one famously volatile currency is roughly flat on the week."
Bitcoin's correlation to wider markets
Bitcoin's relationship to other assets has been the subject of research at Pantera Capital. In June, it examined (PDF) bitcoin's correlation to seven major global equity indices, the benchmark 10-year US Treasury note, crude oil, gold and the dollar index.
The hedge fund tracked bitcoin's correlation agains these major measures over the 12 months ended June 2014 and found no correlation between the cryptocurrency and established asset classes.
"Bitcoin's correlation with other asset classes over the last 12 months has been essentially zero. In other words, bitcoins 'march to their own drummer'," the fund wrote in its weekly research note.
It's worth remembering where we were this time last week. The 'BearWhale' had just been vanquished and bulls were ascendant. While market watchers like BitMEX's Arthur Hayes warned that $330-350 was a fair price target, the cryptocurrency's boosters had other ideas. His current price target is $430-$450.
While total traded volume declined to 2.52m coins traded, a drop of 15% compared to last week, there was some movement among share of traded volume among the major exchanges.
BTC China continued its upward trajectory, passing second-placed Huobi on Friday and opening up a gap of more than 20,000 BTC traded by Sunday. The ascendant exchange also bucked the wider downward trend, posting a volume increase of 13%.
A store of value in Venezuela's default?
The bitcoin price has been resilient, holding steady for much of the week. Is this set to continue?
NASDAQ's Martin Tillier suggests that forex traders are watching the US dollar for signs of weakness as the Federal Reserve hints that it may keep its current quantitive easing regime in place. As the dollar has weakened, the bitcoin price has strengthened.
"Bitcoin has become a very volatile, highly leveraged way of playing dollar moves for many traders. To purists who believe in bitcoin as a counter to the problems inherent in fiat currency this is anathema," Tillier wrote.
All this volatility, particularly in the oil markets, could signal more unrest ahead. Economists are on vigil for Venezuela, in particular, which is on the brink of defaulting on its foreign debt as oil prices drop. Noted Harvard economists Carmen Reinhart and Kenneth Rogoff have written that the chances of a Venezuela default are "close to 100%".
As Venezuela teeters on the brink, its citizens may turn to bitcoin to bypass currency controls and to preserve the value of their holdings. The Venezuelan currency, the bolivar, has almost halved in the last two years against the US dollar.
"Even though bitcoin is volatile, it's still safer than the national currency," a recent economics graduate told Reuters earlier this month.
If Venezuela is anything to go by, bitcoin may still prove its worth as a store of value. That's good news for believers in bitcoin's long-term prospects.