Bitcoin Correlations

It is a known fact that both proper knowledge as well as some experience are imperative aspects for successful trading. Beginner traders thus need to start slowly and carefully so as to gain a better understanding of the way things work in the financial market in question. It is important for a trader to have an understanding of the way in which markets generally react with one another, as well as against each other.

Such intermarket analysis revolves around studying price correlations that exist in different markets, as well as evaluating how such market prices could be impacted.

We shall hereby be focusing on Bitcoin correlations. When trading Bitcoin, traders acknowledge that the fundamental correlations that exist with other financial assets have a tendency of shifting over time. These are not generally as strong as other correlations which are considerably more established.

For instance, there is a strong inverse relationship between gold and the US dollar. However, one cannot say that the current correlation between gold and Bitcoin is as reliable or as well documented. This also applies to correlations of Bitcoin and other currencies.
Bitcoin is characteristically known to have a low correlation with other markets which could increase its appeal as a tradable asset. Needless to say, most markets that are currently available for trading, are correlated in one way or other, and as a result the emergence of Bitcoin leads to potential opportunities for diversifying one’s trading and investment strategy.