Hacker News Reader

Comment by JohnJamesRambo | Hacker News Reader

As far as I know Bitcoin is still an uncorrelated asset. Stocks on the other hand will have quite a bad time.

https://charts.coinmetrics.io/correlations/

Bitcoin regularly moves in tandem with SPX and this effect will continue to strengthen as more ETFs become available, and futures volume (on classic regulated exchanges) increases. These instruments are gateways that enable a much larger class of investors to come into Bitcoin cheaply, but it also means Bitcoin joins their portfolios and is treated similarly to other asset classes during market events. Uncorrelated, mass adoption: pick one.

During the massively undersubscribed 7 year note auction last month BTC absolutely tanked and recovered in perfect synchrony with SPX, TLT and gold.

During a recent deleveraging event (last month I believe), it was possible to observe BTC following an identical path to SPX for almost the entire day.

You say it moves in tandem but the only time I’ve ever see it approach mathematical correlation was the Covid dump day when all markets were correlated.

Play around with the link I provided and see for yourself.

Watching charts we can see all sorts of things we think are correlated but mathematics provides a way to check if those things are real or noise.

is cointegration a mathematical concept?

how could it be uncorrelated when investors are using the same source of funds (stimulus checks and low interest rates) to bid on both assets

Bitcoin is more international, perhaps? It's certainly easier for many to acquire than a mix of American stocks. Of course, the US is the largest part of the cryptocurrency market and if they thrash about in the pool, it should at least result in some ripples.

The entire world invests in s&p500 and global indices.

This simply isn't true. I live in Thailand. Most locals here don't have access to US stocks, or don't know that they do. Young people here have a Thai stock trading app (for the SET, which is the exchange) on their phone and another one for their domestic cryptocurrency exchange of choice. I think very few of them are buying AMZN or TSLA.

I'd bet fewer than 3% of the population here are buying US stocks.

You cannot fill two buckets at the same time. You're right though that from bird's eye view, they are both correlated with the overall amount of available money.

Reply on news.ycombinator.com