October 21, 2020

The end of bitcoin's correlation with traditional markets?

Analyst Willie Wu believes that Bitcoin's correlation period with traditional markets is coming to an end. At the same time, the bitcoin rate to gold broke through the line of a three-year downtrend and tested it already as support, which is usually regarded as a bullish signal.

In a September 25 tweet, Willie Wu predicts that bitcoin's behavior will continue to resemble a successful startup that will split from the market and go its own way.

Willie Wu: Bitcoin's Macro Correlation Will Be Broken Soon

The adoption and distribution, according to Wu, willfollow the classic S-shaped pattern, much like the growth of successful startups. And this factor will outstrip investors looking for an effective hedge against other asset classes.

“Bitcoin will soon cease to correlate withtraditional markets, and will continue to move on its own S-shaped adoption curve (as startups grow), having lost dependence on the perception of traditional investors as a tool for hedging risks, ”writes Wu.

"User adoption fundamentals have already exceeded all-time highs."

Both the hashrate and the difficulty of the Bitcoin network are at record levels, highlighting the competitiveness and long-term profitability gain for miners.

Willie Wu's opinion on the imminent end of the currentBitcoin's dependence on factors such as the US Dollar Currency Index (DXY) is supported by another chart, which would suggest that these changes are already taking place.

The calculated bitcoin rate in relation to gold,which has been in a downtrend since the establishment of historical highs in BTC / USD in December 2017, broke this trend line during the recovery of the BTC / USD rate to $ 12 thousand in late July.

The subsequent retest of the trend line looks like a confirmation of it already as a support.

This dynamics on the weekly chart was noted by Travis Kling, investment director of the crypto hedge fund Ikigai.

The chart of the ratio of the BTC / USD rate to the price of gold broke the three-year downtrend. ()

MicroStrategy sees Bitcoin as a "non-toxic" currency

Meanwhile, Willie Wu's predictions are perfectly in tune witharguably the biggest investor to come to Bitcoin this year, MicroStrategy, which also refuses to call its $ 425 million investment in BTC a hedge.

In an interview with RT host Max Kaiser on his Keiser Report show, CEO Michael Sailor expressed a genuine personal interest in seeing the company adopt the "bitcoin standard."

“What we are seeing is a currency war. But this is not a war to make the American currency weaker than the European one; no, this is a war in which those who issue the currency attack those who own it, ”he said.

“And now we begin to understand that the reasonthe toxicity of the currency lies in the political ... in the financial decisions of the central banks. The sane solution under these circumstances is to flee from a toxic currency to something non-toxic, and I think bitcoin is that very non-toxic currency. "

He noted that exchanging cash for bitcoin also makes sense, since sitting on cash reserves is like sitting on melting ice cubes due to the increase in money supply.

The article does not contain investment recommendations,all the opinions expressed express exclusively the personal opinions of the author and the respondents. Any activity related to investing and trading in the markets carries risks. Make your own decisions responsibly and independently.