Bitcoin stock charts are pseudo-deceptive as BTC rises in price
Does anyone happen to know of a site that tracks bitcoin stocks adjusted for some fiat currency? It seems like all stocks go down in price, which makes sense as BTC goes up. But it would be nice to see a comparison of the two side-by-side.
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Is Bitcoin a leading indicator for stocks? (plot attached)
I read an article that claimed that Bitcoin tended to lead stocks market changes, but this was the usual tea leaf reading and chart-staring. So I decided to compute the cross-correlation function of daily bitcoin percentage changes with SP500 daily percentage changes, from 2015 to today. Plot here: https://i.imgur.com/zNHSzZK.png The big white peak shows that bitcoin and stocks move in parallel on the same day (zero time lag). But the broad bump in the red boxcar-smoothed correlation function suggests that bitcoin prices changes today are correlated with SP500 changes over the upcoming week. However the SP500 seems to have little or no predictive power for Bitcoin, because there's no peak to the left of zero. NOTE: the cross-correlation function is defined as c(t) = ∫ 𝝙BTC(𝜏 )/BTC((𝜏 ) ⨉ 𝝙SP500(𝜏 +t)/SP500(𝜏 +t)d𝜏 so that if BTC(𝜏 ) tends move the same as SP500(𝜏+t) for many 𝜏 then c(t) should have a peak at t. edit - a simple hypothesis: The zero-lag (white) correlation is obviously just normal correlated markets. The longer (red) correlation represents an internal lag time to the stock market in responding to events. For example a negative event causes a crash in both BTC and SP500. The Bitcoin falls fast, and stops, but SP500 reacts slowly and the sell-off takes a few days to complete. As an analogy, an earthquake knocks down a building (BTC), and also sets off a huge landslide (SP500), but the big landslide tends to be followed by a series of smaller landslides. The building's fall "predicted" the multi-day landslide, but it's not a useful prediction, because you could have looked at the initial landslide and known that more landslides tend to follow. edit 2: a technical way of saying this is that the SP500 might have a longer impulse response to external events than BTC.
The idea of that as more people adopt Bitcoin the price will stabilize to its long term exponential curve. Here's why I think that's true.
We're already seeing this. Check out the price charts to confirm.
It makes sense. The ratio of seasoned Bitcoiners to new investors increases over time. N00bs are far more likely to panic sell for a loss. So as more and more Bitcoin users develop their strong aversion to selling, the sharp downward swings (caused by panic selling n00bs) are reduced in severity and frequency.
Plus now we have larger, more wealthy entities who buy the dip. Microstrategy already publicly announced that they're doing this. So large dips are cut off before they gain any momentum. You'll only see large downward swings if someone cashes out a few million dollars in BTC all at once. But the severity of those dips will be blunted.
Regular buyers: Grayscale Bitcoin Trust alone is buying more than 100% of the newly mined Bitcoins. Where do you think the extra Bitcoin is coming from? (BTW glorious nation of Kazakhstan just invested $700,000,000 in Bitcoin mining gear). Eventually this pool of existing Bitcoin that they're buying from will dry up more and more. That's without even considering the massive effect that the 4 year halving cycle creates.
At the next halving 31months from now, the amount of new Bitcoin created gets cut in half again for the 4th time. This will run the well even drier. Let's say Grayscale continues to buy the same amount (even though they will definitely keep increasing their investment and other players will join in too). The faster the reserve of already existing Bitcoin is getting bought up, the faster the price goes up. The halvings increase this every 4 years.
It is an absolute certainty that Bitcoin will outperform every alternative investment and one day replace or completely dominate every other type of money. And for the Bitcoin scaling issue, the lightning network has already solved that. It does a million transactions per second, and has the capacity to send 10 BTC at once, instantly, for a few Satoshis (practically free). The Bitcoin blockchain will always run right about at capacity. The lightning network has private transactions. How do we know that Bitcoin together with Bitcoin lightning aren't doing as much business as Visa? There is no limit for how high Bitcoin will go. Compare this with TSLA. Today they have a P/E ratio of 1145. Many will consider this to be overvalued. That limits how high the stock price can go. Plus, you can't spend stock. You HAVE TO sell it first. Bitcoin has no such limits. The price of Bitcoin can and will continue to go up exponentially over the long term. As volatility improves, the pace of price increase should increase as well. Accelerating acceleration. You never need to sell Bitcoin. Just spend it, unlike stocks or other financial instruments. Eventually, after 6 or 7 more halvenings, Bitcoin will have a market cap of higher than the rest of the world's wealth combined. Every step is there between here and then. Eventually government created fiat money will be nearly entirely worthless by comparison. This halving period will create another bull run as more institutional investors adopt the hold forever strategy. Volatility goes down. Bitcoin becomes more famous for its performance, draws deeper attention, converts more believers/investors, more people hold forever, Bitcoin price goes to infinity with no limit. It's just a matter of time. Bitcoin is the most genius thing I've ever seen.
Is this a great delusion or am I missing something?
Hey guys, Been closely following the market throughout the last few months and it feels like I'm watching a movie or something. Don't get me wrong, I am a hodler and understand the mechanics of BTC, but I also don't believe in decoupling of BTC from the stock market (as it's clear, BTC growing chart is tightly related to the s&p growth). Which leads me to a thought that this entire show we're witnessing right now is nothing but either a great delusion or a deliberate pump before a massive dump. Fundamentals are simply not here, economy is simply not running. What is happening? Does anyone have the same feeling about it? Interested to hear your opinion about it. p.s. all these memes are becoming slightly annoying, it feels like BTC has become a pure speculative asset and the only purpose of the majority of posters here is to cause FOMO in public.
Bitcoin is due to go up if you follow S2F - Let's get ready to rumble!
BTC historical Stock to Flow chart According to Stock to Flow, it is time for BTC to makes some moves up. It's been a fairly dependable bellwether for Bitcoins movement, whether up or down. As you can see from the above chart, it looks to be the season to be jolly for longs is upon us. Of course, this could go sideways still for another couple months, but with every passing day the the magnet drawing BTC to the northern reaches gets ever stronger. Here is a more recent range for the Stock to Flow model: Stock to Flow chart from June 2016 to January 2020 Comparing where we are now to the lead up to the bull run starting in 2016 - we are on the cusp of a long and fruitful bull season! Now of course, Bitcoin could decide on a new path and break from precedent. But, why should it? What do you think? I for one do believe that history will repeat once again, but of course: nothing is 100% Fingers crossed that this model continues to be correct!
Stock tokenization to bring new stock pairings similar to btc/eth
Currently if trading Eth on entry and or exit you have many different choices and charts to pick from if you assets are diversified. Btc/eth eth/usdc Ltd/eth exchange coin/eth, and more. When trading Ethereum into Bitcoin I have learned to watch the ratios. How many watch the current ratios of stocks when making plays, for example; amd/nvda, tsla/btc, msft/goog, amzn/goog, gld/slv, etc. Just listing a couple of pairings I think will gain traction when stocks become securities with 24/7 trading. Curious if others have thought on this and some pairings you are most excited to use.
Just because both crypto and the stock market crashed during a global pandemic that does not mean they are suddenly correlated.
Crypto is non-correlating to the stock market. It is NOT a negative correlating to the stock market. Negative correlation to the stock market would mean bitcoin goes up when the stock market goes down. That is not the case for crypto and the stock market, for the most part they make moves independently but sometimes have correlation during a major events like a global pandemic. In this case a global event has caused almost ALL markets to crash. The only safe haven would be negative correlating assets of which crypto is not. More on non-correlating assets: https://www.thebalance.com/what-is-asset-correlation-2894312 Overall crypto fundamentals have not changed. Once the panic is over expect the fundamentals to be a driving factor of price. See these fundamental reports on digital assets: https://cryptoeq.io/articlesAndReports
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