May 13, · Bitcoin is meant to be an uncorrelated asset and this is/was a positive. However, it is clear that right now bitcoin correlates with stocks very closely: Bitcoin and stocks are moving in syncAuthor: Clem Chambers. Using Python and Pandas, we have analysed the relationship between stock market and Bitcoin prices. As per our analysis results, we can say that BTC and S&P prices move along in the same direction. It would be interesting to know if this relationship holds as . Aug 25, · A report from Digital Asset Data illustrates (chart attached) that over the past three months, bitcoin has moved in tandem with gold and has swung inversely to moves in the stock market. .
Stock market bitcoin relationshipHow The Stock Market Great Rotation Resembles Bitcoin and Altcoins
And what are the factors driving this interesting investment phenomenon? Instead, the regular tech stock over-performance has taken a backseat, allowing other stocks and indices to shine as a result.
After the Black Thursday market collapse, all major US indices fell to deep lows, but only the Nasdaq has since broken its previous record. The rise was primarily driven by individual tech stocks reaching new all-time highs, such as Amazon and Apple. The primary market mover suddenly showing stagnancy and underperformance next to other indices that have underperformed over the last four years sounds eerily familiar.
In the crypto market, the same sort of trend is taking place. The market over-performer , Bitcoin, is suddenly trading sideways after a strong rise from Black Thursday lows. Savvy investors who bought low, are now selling high and looking for assets with more room to run. This closely mimics the sentiment and price action taking place across the stock market. Bitcoin, however, is nearly halfway to its former record. Investors are recognizing that not only do they have BTC profits to take, but that moving that capital into altcoins could provide greater a return.
Until either Bitcoin or tech stocks — two asset types that have shown a close correlation in the past — begin to set new highs, interest may remain high in these alternative investment choices. That means that when the prices of the stock market go up, we can expect Bitcoin to follow the trend and also move up. We can also visualize the correlation by using matplotlib and statsmodels :. The red colour of the graph means that the relationship is strong and positive.
We can also check if the relationship is statistically significant using linregress and scipy. Since our p-value is lower than 0. Using Python and Pandas, we have analysed the relationship between stock market and Bitcoin prices. It would be interesting to know if this relationship holds as well in a recessionary business cycle. To perform such analysis we may need to wait a while since during the last years, we have been living in an expansionary economy.
See complete script below:. Hands-on real-world examples, research, tutorials, and cutting-edge techniques delivered Monday to Thursday. Make learning your daily ritual. Take a look. Get started. Open in app. Sign in. Editors' Picks Features Explore Contribute. Jose Manu CodingFun. Written by Jose Manu CodingFun. Python for Finance. Learn step by step how to automate cool financial analysis tools. Twitter: CodingandF.
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