30 Mar 2023
Correlations are declining - And it makes sense!
Preview
In Short
This article points to several forces leading correlations to naturally decline between BTC and traditional markets. In essence, no natural long-term relationship to interest rates worsened liquidity, structural changes, and behavioral patterns all contribute to the current paradigm.
Takeaways
- BTC's 30 day correlation with Nasdaq sits at 0.3, down from 0.75 in October
BTC's 30-day correlation to Nasdaq currently sits at 0.30, down from 0.75 in October. Why?1. BTC was very sensitive to hikes in the short term *NOT* necessarily sensitive in the long term.
2. Smaller mcap, more risky to use in hedges
3. Liquidity
4. Tesla
5. Narrative
