Bitcoin’s Correlation With Tech Stocks About To Change? FOR COINBASE: BTCUSD by SPY_Master – Technische Analyze – 2023-02-05 01:28:04

The above diagram shows the relationship between bitcoin ( BTC ) and the Nasdaq 100 Exchange Traded Funds ( QQQ ).

The correlation between these two is the highest never. See the chart below for a closer look.


For the statisticians out there, here are the current correlation values ​​between BTC And QQQ (measured using monthly closing prices with a 20-period regression): the r-value is 0.936, r squared is 0.7916, and the p-value is 0.

This strong connection between bitcoin The NASDAQ 100 is unlikely to last much longer. The relationships between assets tend to fluctuate over time. Therefore, this very positive correlation is likely to decline soon, which will have the effect of weakening the correlation between bitcoin And the NASDAQ 100, or in a more extreme scenario, turned positive correlation into negative correlation.

If the link between BTC And QQQ Indeed it weakens or turns negative, then it must also be true that both assets cannot continue their strong rise at the same time. So, we are left with an important question: Which asset will outperform the other if the perfect positive correlation ends?

We can use a ratio diagram to extrapolate the answer: BTC / QQQ Ratio chart. So let’s take a look at this graph.


In the chart above, we see a price bitcoin On the left is Bitcoin’s performance relative to QQQ To the right. We can see that though bitcoin It’s been on an uptrend, it’s really moved to the downside relative to the performance QQQ . when we watch Stochastic RSI The oscillator, shown in the chart below, we see confirmation of this bitcoin Potentially starting to swing downward relative to his performance QQQ on the weekly chart.


But watch what happens when we review the monthly chart. It seems the opposite is true. (see chart below)


in the monthly chart of BTC / QQQ And bitcoin Just started to swing big. What we’re likely seeing is the monthly turn-on light BTC / QQQ Create a lower wick, which is why it appears as weekly BTC / QQQ The graph is swinging down.

If we reduce – to quarterly (or 3 months ) chart – we see more confirmation of this bitcoin It is set to outpace the Nasdaq 100. (See chart below)


In the graph above, we see a perfect log growth curve bitcoin Regarding the Nasdaq 100 index, incl rising Reflection, reflux, inversion sconces It starts to form in the quarterly time frame. We see too Stochastic RSI Ready to swing back up, ie bitcoin It is preparing to start a period of outperformance for technology stocks on higher timeframes.

Other graphs lead us to a similar conclusion. In the yearly chart of QQQ / spy As shown below, we see that the NASDAQ 100 is set to underperform Standard & Poor’s 500 long-term. This indicates that the current rally in NASDAQ 100 stocks is potentially a bull trap or countertrend for a lower time frame.


When the NASDAQ 100 is set to start underperforming Standard & Poor’s 500 the Standard & Poor’s 500 It is showing itself downward momentum on its annual chart. If this downward momentum continues through the end of 2023, it will be extremely rare, and just as well bearish signal for both indicators.


These and other higher time frame charts are explained in more depth in my post below on the coming period of stagflation. In short, almost all higher time frame charts indicate that the period of unlimited monetary easing is over, and we have entered a new super cycle where the price of money will remain slightly higher.

Great stagflation

That’s how it looks bitcoin Keep winning. As stock market indices break out, marking when another bull trap is likely, bitcoin It is likely to head for a more sustained uptrend than stocks. In the face of stagflation, stocks suffer from a decrease in the money supply (when central banks are fighting economic inflation ) and lower productivity. despite of bitcoin Not immune to similar deflations, their continued scarcity could provide a unique tailwind in the next period of stagflation.

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