Jeffrey Gundlach, chief executive and chief investment officer of DoubleLine Capital, says bitcoin carries so much predictive power that is nowadays the best indicator to know what the stock market will do, as its previous plunges have had a cascading effect on other risk assets.
More info: http://www.businessinsider.com/gundlach-bitcoin-leads-stock-market-movements-2018-4
More info: http://www.businessinsider.com/gundlach-bitcoin-leads-stock-market-movements-2018-4
I (and other traders I know) have been tracking the general correlation between BTC and the stock market for years. But I've still never seen a convincing case for causation like this. I'm guessing it has to do with overall macroeconomic money flow. When credit is easy, every market is liable to prosper, including risky and inflated assets.
I don’t usually trust systems to predict the market, as they are usually useful to understand past events but fail at some point in future predictions.
Apart from that, in the article, he only talks about a period of months, and it is not clear if he has studied the correlation during all bitcoin history, but even in that case, the sample would be small in my opinion.
So, I don’t think bitcoin is the most reliable indicator, it may have had some correlation but I don’t think it is a tool that can have forever and can buy or sell ETFs in short accordingly.
Apart from that, in the article, he only talks about a period of months, and it is not clear if he has studied the correlation during all bitcoin history, but even in that case, the sample would be small in my opinion.
So, I don’t think bitcoin is the most reliable indicator, it may have had some correlation but I don’t think it is a tool that can have forever and can buy or sell ETFs in short accordingly.
Bitcoin was just launched in 2009. There's definitely a correlation, but we have no idea how it will perform in the case of a real crash like 2007-08, 1987 or worse. It's a real small data set so I wouldn't take it too seriously. Like I was getting at above, there's probably better macroeconomic indicators for predicting when everything (including BTC and the stock market) will crash.
