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Bitcoin Correlations Are Instructive

This is a syndicated repost courtesy of Slope of Hope. To view original, click here. Reposted with permission.

It took me so long to do Part One and Part Two of my “bad predictions” post, I was just going to call it a day until tomorrow, but I’m prone to self-guilt, so here I am again with a new, quick post (while simultaneously working on an entirely new project for my Diamond members).

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As I’m sitting here this evening, the markets are (of course) pushing to new lifetime highs. Since cryptos have been on an absolute tear lately, I was curious how Bitcoin correlated with equities. Here, below, is the SPY with its correlation to $BTC beneath. As you can see, right now they’re about as correlated as they can be, with equities and cryptos cheerfully lurching up together. The curious thing is how the correlation is a relatively smooth sine wave, suggestion that these two are going to part ways again and work their way toward being inversely correlated.

Gold, as we all know, has been the odd-man-out since August 6th. Gold is presently inversely correlated to $BTC, even though the two instruments, it could be argued, have quite a few traits in common. These days, cryptos are leaving precious metals in the dust.

Looking at Bitcoin all by itself, it had its highest closing price in history on Tuesday (although, on an intraday basis, it hasn’t quite beat its December 2017 record). My hunch is that it’ll handily beat this record, but it sure would be a lot more appealing if it eased back……….a lot. Going up 100% in just six weeks is a bit much to swallow.

Wall Street Examiner Disclosure: Lee Adler, The Wall Street Examiner reposts third party content with the permission of the publisher. The opinions expressed in these reposts are not those of the Wall Street Examiner or Lee Adler, unless authored by me, under my byline. I curate posts here on the basis of whether they represent an interesting and logical point of view, that may or may not agree with my own views. Some of the content includes the original publisher's promotional messages. No endorsement of such content is either expressed or implied by posting the content. All items published here are matters of information and opinion, and are neither intended as, nor should you construe it as, individual investment advice. Do your own due diligence when considering the offerings of information providers, or considering any investment.

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