That type of correlation has popped up and faded away several times in the past... I've made a study of it.
All totaled, it is not terribly reliable to try and base Bitcoin on the price movement of stocks.
All totaled, it is not terribly reliable to try and base Bitcoin on the price movement of stocks.
actually i could make a theoretical case by which it would make sense that this phenomenon would occur.
Bitcoin, being the small cap like high risk investment it is, would be subject to the liquidity existing in the system. afterall, it was invented to protect adopters from the devaluation shenanigans of the central banks.
the Dow is also highly sensitive to this liquidity pump. as we can see, it is rallying from oversold levels and extreme pessimism in the general economy. stocks appear to have been right and debt markets appear to have been wrong since late last year. this is contrary to the classical wisdom of the last 4 years and is causing all sorts of cognitive dissonance in traders psyche. i've written about this extensively in my blog. the rise in the USD has also been a conundrum for all except those following my lead.
the Dow can be thought of as the General fighting its way up the Wall of Worry with the troops (the Russell, NDX, Transports, S&P, techs, fins) all just now following its lead. why should Bitcoin be any different? as the Dow closes UP at 4pm, it might make sense for traders from other markets, including traders like us, to take its lead and pump up Bitcoin as a result. the Dow is predicting QE3 i'm sure.
and so is Bitcoin.
I understand the rationale. But from an empirical standpoint a correlation with stocks has not proven to be durable.
it would be great to see your methodology.
but just offhand, when last year did the Dow start turning down? May
when did Bitcoin begin its downturn? June.
when did the Dow start turning back up? October.
when did Bitcoin make the turn? November.
