What's the relation between BTC and Nasdaq?

[BernyJB]

Ok, once again, I started a thread and it got deleted (which wouldn't be much of a problem) without as much of a warning (which, at least in my opinion, is RUDE, and it definitely IS a problem).

Well, I'm a newbie asking questions, so I guess I might have better luck here. Hopefully.

I guess asking questions about BTC in the "Bitcoin Discussion" board is not allowed, so here goes nothing:

I'm subscribed to the Coinmarketcap newsletter. Today, I received it, with an article claiming "BTC has been closely correlated to Nasdaq 100"

https://coinmarketcap.com/alexandria/article/bitcoin-price-plunges-to-lowest-level-since-august?utm_source=ActiveCampaign&utm_medium=email&utm_content=Bitcoin+Hits+Lowest+Level+Since+August+%F0%9F%93%89&utm_campaign=Jan+21+Newsletter_FF&vgo_ee=tBEAPeNFNxgSd1Sj3RB503wFoqDlMHNmyq65fGLdufk%3D

So, I don't know anything about Nasdaq. Should I learn about it?

Thank you all in advance. 

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[bitmover]

So, I don't know anything about Nasdaq. Should I learn about it?

NASDAQ is a stock market exchange based in New York City.

Should you learn about it? Of course you should, learning is never too much.

NASDAQ and cryptocurrencies are going down today. Why? People are speculating about the FED (United States Federal Reserve, which is like a US Central Bank) raising interest rates in a few weeks. So everyone is selling stocks and cryptocurrencies to buy  US treasure bonds with higher interest rates.

This newsletter is talking about Bitcoin correlation with technology stock prices from NASDAQ. Those stocks are going down as well.

[SquirrelJulietGarden]

They are not correlated but there are some overlaps in some periods. Don't let overlaps make you think that they have real correlation with each other.

It is like Gold and Bitcoin. There are times people think Bitcoin and Gold move up and down together. The pandemic and months later prove that this assumption about their correlation is inaccurate. It is same for Nasdaq, S&P500 and Bitcoin. They have difference supply, financial force behind. First twos are backed by government and inflation which is not seen in Bitcoin. From core difference, you can see they are very different and relation is talked by people or media is just incorrect assumed one.

[BernyJB]

Alright, thank you both! That makes sense...
One might think sites like Coinmarketcap would be more careful about the quality of their information. I guess I need to be more careful about the quality of my sources...

Should you learn about it? Of course you should, learning is never too much.

I'm a firm believer on that. But right now I have about 27 courses already downloaded and waiting to be watched (from Data Science to Bread Baking), so I guess I can wait a bit.

[CryptocurencyKing]

Ok, once again, I started a thread and it got deleted (which wouldn't be much of a problem) without as much of a warning (which, at least in my opinion, is RUDE, and it definitely IS a problem).

Unfortunately, that's how the forum works. What you ought to realise is that, these are humans just like yourself doing all these works or reading through posts be it a thread and comment and in most cases, it comes as a report from other forum users. The energy been put in to go through the reports and determine its best fit and all is already exhausting not to mention putting out a warning or some form of correction.
For this reason, some of the messages are automated and it might not be specific as such to address a definite issue. So, issuing a warning or correction on every deleted thread might just be put of place.

Coming yo your queetion, Nasdaq and Bitcoin...
Nasdaq is a stock and commodity traded on forex, cryptos are traded there too but categorised as binary. That being that, stocks are owned by companies or corporations and owning a portion of it by an individual  entitles an investor to a share of the interest or gains on it over time and are split based on the portion owned. While,

Bitcoin is an asset that belongs with no company or corporation but distinctly owned by individuals and you take profit as pleased based on market conditions at a particular time.

[DdmrDdmr]

I recently saw claims correlating stock markets to crypto (BTC essentially), and I came across some thinly compiled data, which I shared on my local board previously:

Source (pdf): https://www.imf.org/-/media/Files/Publications/gfs-notes/2022/English/GFSNEA2022001.ashx

I haven’t been able to see the type of correlation depicted on the above table (Pearson, Spearman, etc.), nor the time intervals they considered, but to get a grasp of the provided values, we could take a look at how Pearson defines them:

If the former correlation table were therefore expressed in terms of Spearson’s correlation, the values are still in the "weak association" range, but moving on towards moderate as of late. Note that the values were negligible just a few years ago.

The above data points to their being, therefore, no real significant correlation yet, but it cropping-up in the horizon. Perhaps, to some point, institutional money that poured-in is played with similar mindsets and rules as in the stockmarket, and although the numbers are not significant, they are seemingly closer to beginning to be so.

We’d still need to see the above in charts and compared over time though, with further granularity than that shown in the above table, which is an indicator to further drill-down into the data.

An interesting thing would be to know, were correlation to become meaningful, whether there is an order of importance in the factors (i.e. does a Stock Market movement cause a likewise movement in crypto, vice-versa, or both indistinctively). An exercise that surely someone will perform at a later point.

[BernyJB]

~snip

Excellent!
That's the data I like to see: numbers. Numbers don't lie, and they leave no room for interpretation.
So, at least for now, the correlation is weak, if it exists at all. Good to know.

CryptocurrencyKing: yeah, I guess it all boils down to that: that's how the forum works.
I wish I could relate to their problems as moderator, but I've been a forum mod in the past. A volunteer mod, yet I did my work the best I could. But, whatever, it's done.

[bitmover]

I found this chart from bloomberg that shows that the correlation is above 0.4, which is nearest the highest value. I liked the chart created by bloomberg:

The 100-day correlation coefficient of the coin and the Nasdaq 100 Index rose above 0.40, among the highest such readings going back to 2011. A coefficient of 1 means the assets are moving in lockstep, while minus-1 would show they’re moving in opposite directions.

“That is a correlation that may be worth highlighting,” said Ben Emons, managing director of macro strategy at Medley Global Advisors. “Sometimes it is just a simple story.”

https://www.dailymaverick.co.za/article/2022-01-21-bitcoins-correlation-with-tech-strengthens-as-risk-appetite-returns/

I don't think this correlation is so important now, neither that it will stay positive for long. But for now, with this drama about inflation, FED raising interest rates, etc  it is likely that stock market and crypto will face some corrections.

[suzanne5223]

Bitcoin price, stock, and equity are not correlated. There price is independently determined by the level of demand and supply. However, there are some seasons where a certain circumstance influences the price of both Bitcoin, stock, and equity. I guess this is the reason why some people have the impression the price of Bitcoin and Nasdaq correlated which is not.

[mk4]

Ok, once again, I started a thread and it got deleted (which wouldn't be much of a problem) without as much of a warning (which, at least in my opinion, is RUDE, and it definitely IS a problem).

Which thread? The first topic that you created(and that I already had a reply to) is still up and running.

Topic: BTC and Nasdaq? https://bitcointalk.org/index.php?topic=5382876


Requesting mods/admins to merge topics.

[pooya87]

There is absolutely no relationship between bitcoin or any other markets (gold, NASDAQ, S&P,...). There is however a relationship between bitcoin and the world economy. Note that it is the "world" economy not one country's (whereas NASDAQ is a US thing).
For example when the pandemic started and a lot of people lost their jobs, home, etc. and they were desperate for money they started selling anything they could, that meant stocks, gold, and bitcoin. So bitcoin drop wasn't because stock market dumped but because the world economy dumped.

Other than that any other correlation is either coincidental or irrational people behavior, like if someone sees US stock market tanking and then they panic and for no reason at all sell their bitcoins too!

Besides we don't have enough data to really talk about the relationship between bitcoin and world economy either. Because we only had 2 actual examples. One is from 2008 when the recession happened and that lead to bitcoin being created (essentially because world economy tanked) and the 2020 pandemic that led to an initial panic sell but then bitcoin reached a new ATH during that time when the stock market was still dumping.

[BernyJB]

Ok, once again, I started a thread and it got deleted (which wouldn't be much of a problem) without as much of a warning (which, at least in my opinion, is RUDE, and it definitely IS a problem).

Which thread? The first topic that you created(and that I already had a reply to) is still up and running.

Topic: BTC and Nasdaq? https://bitcointalk.org/index.php?topic=5382876


Requesting mods/admins to merge topics.

Oh, thank you mk4, and my apologies. I didn't see it. I guess I'm getting dumber with age...
Thank you for requesting the merge. I don't know how to do that.

EDIT: alright, so I'm not a complete idiot. The thread was moved to a board I had never used!
At least it's good that it isn't where I didn't see it...

[Darker45]

I don't know how correlation is being understood by the writer of that article. What I know is that having the same direction once in a while does not mean correlation. Both the stock market and the Bitcoin market have only a couple of directions, up and down. When the stock market goes up while the Bitcoin market is also going up; it does not automatically suggest correlation. Correlation is more than just sharing the same movement every now and then. Mostly this is simply coincidental. Correlation means relationship. And Nasdaq and Bitcoin don't have that.

Should you learn about Nasdaq? It depends on your interest. But it's not a matter of should. Generally, you don't have to.

[lovesmayfamilis]

EDIT: alright, so I'm not a complete idiot. The thread was moved to a board I had never used!
At least it's good that it isn't where I didn't see it...

I was surprised by your claims to delete the topic, as I see that you always write good posts.
Just in the future, if you suspect "rudeness" (irony)  again, look in the history of your messages.
https://bitcointalk.org/index.php?action=profile;threads;u=3399180;sa=showPosts

 If you don't find your post, then it can probably be deleted, although in these cases you will always receive a notification.

[BernyJB]

Thank you lovesmayfamilis, I didn't think to check my profile's history...
I did get one thread deleted before. No warning. Maybe that's why I got upset this time. In any case, the fact remains they could've warned me. I could've also checked...