Bitcoin is Risky, but Uncorrelated With Stocks: Scott Melker

Crypto trader Scott Melker says that while stocks and Bitcoin (BTC) have appeared to move in tandem since Black Thursday: “They are not correlated assets”. In a Twitter thread for his 84,000 followers, “The Wolf Of All Streets” outlined his theory about why Bitcoin will tread its own path during the financial crisis. Melker looked at the price of BTC since its creation in 2009 and compared it to assets in legacy markets like stocks. According to Melker, the cryptocurrency has only been moderately correlated with traditional markets for a brief period.

History tells the story

As Melker explained in detail, “You can compare any 2 assets on a scale of -1 to 1. 1 means correlated.” Data from eToro’s just released Q1 2020 report found that BTC and the SPX (Standard and Poor’s 500 index) had a correlation of 0.59 in February 2020. Once the pandemic took hold, the cryptocurrency “became significantly more correlated with gold than with the [SPX],” achieving a correlation of 0.72. Read More...

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