Bitcoin Forum

http://www.thegenesisblock.com/want-to-know-where-btc-prices-are-going-watch-usd/

https://www.tradingview.com/x/DrzSr3h7/
https://www.tradingview.com/e/dqFoObff/#

This will change as bitcoin becomes more globally adopted.

There seems to be quite a bit of denial about this. Something like: "Bitcoin couldn't possibly follow a doomed fiat currency."

It's not that bitcoin is following the value of the dollar so much as it's following the dollar's rhythm.

If this is the case, then we are screwed as many think the dollar is in imminent danger of at least a temporary huge drop in the near future. I'm not holding onto more than $1K worth of BTC till the dust settles. Great time to buy more silver anyways.  ;-)

My guess is:
Atm the dollar is still trusted, so if
people want to get away from other assets -> go in $ and Btc

But if the trust in dollars disappears, Bitcoin is likely to be freed from this correlation.

::)

USD is rapidly losing trust. Other countries are switching to other things as reserve currencies like Canadian, Australian, and Chinese.
They can read how all we do is print more, making it more and more worthless i.e. merely fiat. Some think Ft Knox is actually empty and filled with gold-plated lead bricks.

  All this means is that 90% of the trades happening are by speculators who are buying and selling dollars with btc. When the dollar starts crashing there will more than likely be a flight from USD to BTC which would completely defy this trend.

Let's see, in the last 6 months bitcoin went from less than $20 to over $250 and then crashed back to around $60. Since then it has oscillated between the $160 to $80 range and most recently has kind of been bouncing around in the low $100 range for a few months.

In 6 months the dollar has...well, it did some stuff too.  But these last 7 weeks, look out!  Very high degree of correlation there.

It's based on 50 days of data (since 1st May) ... I wouldn't want to be betting too much on that  ::)

And the smart money is on deflation in the short term.  What the many think is thankfully not how things play out.  The many are usually woefully uninformed when it comes to economic theory and data.

Also, IMO, this correlation only holds if you look at markets since the May top in stocks and will cease to exist when stocks find a bottom.  During deflation, cash is king, and the market is affirming that it views bitcoin as cash.  Gold not so much because it has major liquidity problems.

^^This^^

You can pick any currency, stock or whatever and find periods where it correlates with BTC or any other commodity.

The reason why it correlates so much with USD and not something like gold is because USD is what the price is based heavily on. Other currencies get converted to USD to make trades. It's a bit more complicated than this, but it's not superstition.

If the correlation was based on USD being the other half of the trade, the correlation would be inverse.

And how does gold have a liquidity problem? Any coin dealer will buy it or peeps on Ebay, etc.

Yeah, for 25% below spot  :P

And you can't easily buy consumer goods or assets with gold.  Transaction (are you sure it is gold?) and transportation costs are too high.  Gold is also not easily divisible (takes a lot of energy).  Unless you mean paper gold, and then there are counterparty risks.

I'll stick to bitcoin.

It's the only legal way to get fiat out of bitcoin. I prefer silver much more because of the divisibility mentioned, although there is a gold "card" that is segmented and can be broken into 5 gram pieces I think it is. I prefer the coins because any yahoo can read it and see that it says one ounce and believe it a lot more than brick of the stuff.

Huh?

Over what time period??

I don't think this correlation is valid - maybe for a very short time period. My own long-term correlation studies (utilizing ALL the data) don't match up with this.

Just the last 50 days.

It seems to be a textbook example of what econometricists call "spurious regression", and occurs surprisingly often with timeseries data. [Check the Durbin-Watson statistic to be sure!]

I.e. the high correlation is probably meaningless and there is no relationship.

OK, that makes more sense. 50 days is pretty much random IMO. The study I ran shows a strong correlation with the S&P, but that was over all the data. The dollar more or less moves inversely to the S&P, hence my surprise at the OP.

keep in mind the USD Index used here just measure USD in terms of other fiat currencies. If value is lost on all fiat currencies evenly, the USDX won't move.

If you want to talk about the "value of the Dollar", you'd have to look at it in terms of hard assets, maybe stocks and the like. Possibly BTC in the future. One can clearly see (overlooking the more recent move) that the USD is going down down down.

FTFY

I wouldn't overlook the recent moves that are occurring simultaneously in all major markets.

when everything measured in something moves unisono, maybe it's the something that actually moves.

Right.  Everything priced in fiat has been falling, thus deflation.  Yes, we have had quite some inflation in the recent past, but I wouldn't discount the potential tops forming.

I think an important test of Bitcoin is will people outside the USA buy Bitcoin to give a support level if the USA was to drop massively thus leading desperate people to cash in their BTC savings? - how to analyse that other than simply looking at country distribution?

If we look at:
https://en.bitcoin.it/wiki/Bitcoin_Ladder#Top_countries

we see a few BRIC countries...
 key ones for me are Poland & Russia. Brazil seems a bit reliant on USA trade? - as do the other big ones?

 So it's difficult to say what if would take for BTC to decouple to the dollar. One thing's for sure - we need to get Bitcoin spread more multilaterally & economically in order to further secure it. Growing use in USA antagonistic countries such as Venezuela & Russia is bullish. states.


edit: This presupposes a drop in the USA dollar and stocks. While many have been going on that the USA is about to fall for ages you have to remember that it is the global ruler and if times get tough cash tends to flow to the core, hence the USD bull run.

You can get all sorts of correlations if you shift things around 1,2 or 3 days forward or backwards for short time periods.

Correlation is not causation.

A famous example is that some economists used to think that the solar cycle heavily influenced the economic cycle =)