Is the recent correlation of $BTC with S&P 500 flashing a Bottom Signal ?
Chart Parameters :
Orange line - $BTC price action.
Blue line - 30d rolling correlation line between $BTC and S&P 500.
Green line - indicates $BTC and S&P moving in similar or identical.
Red Line - indicates $BTC and S&P moving in opposite direction.
The recent data shows that $BTC and S&P move identical. More clearly both are in a downtrend which can be related to FED as we hear that the FED will no more pretend to act dovish anymore ( keeping interest rates at low, Continuing the buyback program and Quantitative Easing ) with the recent FOMC meeting. There can be many reasons why the FED needs to act HAWKISH. Maybe US is facing highest ever inflation ( falsifiable rate : 7% 😂 ) and to improve the credibility of dollar as a world reserve currency as we are recovering from the pandemic. However I'm not an expert in this area. So i'll leave it to the community for an open discussion in the chat or in our discord server. If history has to tell us what can happen next then you can see from the above chart ( showing the entire life of $BTC) that a correlation between S&P and $BTC coincide during a Macro Bottom or during consolidation mode after which we see a Bull run. Thrice - post 2017 blow off top, early 2021 - we have witnessed high correlations which have occurred during a Top formation.
Long Story Short :
High correlation during consolidation and downtrend indicates a safe entry point to participate in a bull run and pile up more Sats respectively. We are now seeing case 2.
However both the cases are safe to enter into $BTC according to history of $BTC.
High correlation during an uptrend - which has occurred thrice ( look the red lines ) - indicate not too safe to enter $BTC. Leaving it there to you. Have a close eye on the chart ( You only need your API key and provide it in the code ) and use the information however you will.
All credits goes to the Santiment team and socialtrends. For in-depth analysis on this topic make sure to check out his Insight.
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All the analysis made here are based on historical data and not financial Advise.
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