9 min
FIR 77: Can YOU See The BITCOIN Trade Signals?? Financial Investing Radio
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- Investing
Liquidity on the crypto-currencies is a challenge at times; and while the feds work out their regulatory magic there are still opportunities to trade these currencies using key trade signals. But before we get to that...what on earth does fear have to do with Bitcoin?
Well it comes down to correlations. Some people are looking for correlations with Bitcoin.
In other cases I have seen proposed correlations with the VIX. As you may or may not know, the VIX is an indication of the anticipated fear in the stock market. In general as the VIX goes up in value then the general market typically goes down.
There's a whole other discussion on whether the VIX is trustworthy. But for our purposes here we are looking at Bitcoin and VIX. And some have proposed that as the VIX goes up, Bitcoin goes down. Interesting.
In some cases I have seen proposed correlations to the Dow Jones Index.
And still others have proposed correlations with other currencies such as the Dollar EFT UUP.
I've even seen some people propose correlations between Gold (GLD) and Bitcoin.
So what is it?
As you look at the charts you can see in most cases periods of time where Bitcoin seemed to be correlated with each of those instruments.
If you ever wanted to see a current list of active crypto-currencies go to:
https://coinmarketcap.com/
An interesting site is SIFR Data...where correlations between crypto currencies and equity-based instruments such as the SPX, VIX and others are plotted in a matrix.
https://www.sifrdata.com/cryptocurrency-correlation-matrix/
As you examine that site looking at the relationships plotted you will soon see that there is higher positive correlation between Bitcoin and other crypto currencies. But there's not a strong, sustainable (over time) positive or negative correlation between Bitcoin and stocks or stock indexes. Although as I mentioned there are certainly periods of empirical overlap.
In the cointelegraph.com article on Bitcoin correlation to the stock market...
https://cointelegraph.com/news/so-is-there-a-correlation-between-bitcoin-and-stock-market-yes-but-no
Tom Lee (from Fundstrat) states: "Cryptocurrencies have their own economy based on activity on that Blockchain. Equities have their own economy based on earnings per share multiples. The institutional overlap is essentially zero."
So, rather than trying to find a correlation; what if you approached Bitcoin and other crypto-currency trading using some basic technical analysis? Would that work?
What if you looked at the Bitcoin future (/XBT) from CBOE or the NYXBT Bitcoin NYSE index.
On any given day using some technical analysis such as certain moving averages, RSI settings, and probability analysis...could you find some highly probable locations?
I did a little back testing and found some probable locations using certain technical settings. What have you found?
Thanks for joining and until next time...let me know what techniques you are using for your Bitcoin entry and exit locations.
Liquidity on the crypto-currencies is a challenge at times; and while the feds work out their regulatory magic there are still opportunities to trade these currencies using key trade signals. But before we get to that...what on earth does fear have to do with Bitcoin?
Well it comes down to correlations. Some people are looking for correlations with Bitcoin.
In other cases I have seen proposed correlations with the VIX. As you may or may not know, the VIX is an indication of the anticipated fear in the stock market. In general as the VIX goes up in value then the general market typically goes down.
There's a whole other discussion on whether the VIX is trustworthy. But for our purposes here we are looking at Bitcoin and VIX. And some have proposed that as the VIX goes up, Bitcoin goes down. Interesting.
In some cases I have seen proposed correlations to the Dow Jones Index.
And still others have proposed correlations with other currencies such as the Dollar EFT UUP.
I've even seen some people propose correlations between Gold (GLD) and Bitcoin.
So what is it?
As you look at the charts you can see in most cases periods of time where Bitcoin seemed to be correlated with each of those instruments.
If you ever wanted to see a current list of active crypto-currencies go to:
https://coinmarketcap.com/
An interesting site is SIFR Data...where correlations between crypto currencies and equity-based instruments such as the SPX, VIX and others are plotted in a matrix.
https://www.sifrdata.com/cryptocurrency-correlation-matrix/
As you examine that site looking at the relationships plotted you will soon see that there is higher positive correlation between Bitcoin and other crypto currencies. But there's not a strong, sustainable (over time) positive or negative correlation between Bitcoin and stocks or stock indexes. Although as I mentioned there are certainly periods of empirical overlap.
In the cointelegraph.com article on Bitcoin correlation to the stock market...
https://cointelegraph.com/news/so-is-there-a-correlation-between-bitcoin-and-stock-market-yes-but-no
Tom Lee (from Fundstrat) states: "Cryptocurrencies have their own economy based on activity on that Blockchain. Equities have their own economy based on earnings per share multiples. The institutional overlap is essentially zero."
So, rather than trying to find a correlation; what if you approached Bitcoin and other crypto-currency trading using some basic technical analysis? Would that work?
What if you looked at the Bitcoin future (/XBT) from CBOE or the NYXBT Bitcoin NYSE index.
On any given day using some technical analysis such as certain moving averages, RSI settings, and probability analysis...could you find some highly probable locations?
I did a little back testing and found some probable locations using certain technical settings. What have you found?
Thanks for joining and until next time...let me know what techniques you are using for your Bitcoin entry and exit locations.
9 min