1/ BTC, SPX Correlation Leads Reversals?
2/ BTC SMA200 Reversion: BTFD?
3/ “Remember To ₿uy in September”
Investopedia is partnering with CMT Association on this newsletter. The contents of this newsletter are for informational and educational purposes only, however, and do not constitute investing advice. The guest authors, which may sell research to investors, and may trade or hold positions in securities mentioned herein do not represent the views of CMT Association or Investopedia. Please consult a financial advisor for investment recommendations and services.
1/
BTC, SPX Correlation Leads Reversals?
Source: StockCharts.com
Bitcoin, a digital currency created in 2008, operates on a decentralized network, allowing direct transactions without banks. Often referred to as digital gold, it’s finally found enormous interest from leading ETF providers like BlackRock, Grayscale, or Fidelity – also thanks to regulatory progress, paving the way for global adoption. With the 2023 performance of +160%, now YTD +46% at $62,000, it is supported by the 50-week trend at $50,147 and the 200-week mean at $37,735 – both rising firmly, indicating an uninterrupted bull market. A severe 7-week SPX correlation coefficient dip of -0.9 aligned with the summer rally of July, netting a +3% ascent (avg July gain +8.48%) and a +30% rally trough-to-peak. So far, since the cycle low (November 2022), a strongly negative SPX-BTC correlation has marked the end of corrections, as evidenced by the correlations at $16,500 (-0.81) in Nov 2022, $28,000 (-0.92) in Oct 2023, and $62,000 (-0.9) in July 2024. With a 5-month falling channel pattern in sight, history is not likely to repeat itself, but it may rhyme.
2/
BTC SMA200 Reversion: BTFD?
The shorter-term technicals reveal that the 200-day SMA support is $61,313, whereas the RSI is 41, indicating moderate buying interest, with the 50-day momentum at 45. Regarding volatility, the daily ATR is $2600, and the 50-day volatility is curling up at 2220, still encouraging a non-trending environment and a range-bound regime. While near-term expectations are sideways-focused and influenced by the latest FOMC decision to keep rates unchanged at 525-550bps, buying Bitcoin mean-reversion dips in the context of rising SMA200 has led to reversals, pushing BTC higher during this cycle. It might be worth noting that the recent price action mean-reverting moves are in line with the seasonal expectations of the weak Q3, with September as the worst month of the year in sight.
3/
“Remember To ₿uy in September”
Source: The ₿irb Nest
Bitcoin shows a seasonal pattern similar to the S&P 500 or NASDAQ, with September being the only negative month, averaging a -6.45 % loss over the past 13 years (2011-2023). Historically, BTC performs best from October through May, mirroring U.S. equities. The best strategy is to “Buy in October” and sell by June, with notable gains in October and November following September’s dip. Recent trends indicate weak performance from July to September, influenced by high interest rates and economic slowdown.
Keeping the expected Q4 performance of Bitcoin at +50%, and a positive outlook scoped by the godfather of seasonal studies Jeff Hirsch, for 2024 as the election year returning +12.8% since 1949, Bitcoin seems to be benefiting from the abnormal rallies in major indices through the mean of mostly strong and positive correlation.
Last year, the mantra “Remember To ₿uy in September” served us well. Will it do similar now?
—
Originally posted 5th August 2024
Disclosure: Investopedia
Investopedia.com: The comments, opinions and analyses expressed herein are for informational purposes only and should not be considered individual investment advice or recommendations to invest in any security or to adopt any investment strategy. While we believe the information provided herein is reliable, we do not warrant its accuracy or completeness. The views and strategies described on our content may not be suitable for all investors. Because market and economic conditions are subject to rapid change, all comments, opinions and analyses contained within our content are rendered as of the date of the posting and may change without notice. The material is not intended as a complete analysis of every material fact regarding any country, region, market, industry, investment or strategy. This information is intended for US residents only.
Disclosure: Interactive Brokers
Information posted on IBKR Campus that is provided by third-parties does NOT constitute a recommendation that you should contract for the services of that third party. Third-party participants who contribute to IBKR Campus are independent of Interactive Brokers and Interactive Brokers does not make any representations or warranties concerning the services offered, their past or future performance, or the accuracy of the information provided by the third party. Past performance is no guarantee of future results.
This material is from Investopedia and is being posted with its permission. The views expressed in this material are solely those of the author and/or Investopedia and Interactive Brokers is not endorsing or recommending any investment or trading discussed in the material. This material is not and should not be construed as an offer to buy or sell any security. It should not be construed as research or investment advice or a recommendation to buy, sell or hold any security or commodity. This material does not and is not intended to take into account the particular financial conditions, investment objectives or requirements of individual customers. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.
Disclosure: ETFs
Any discussion or mention of an ETF is not to be construed as recommendation, promotion or solicitation. All investors should review and consider associated investment risks, charges and expenses of the investment company or fund prior to investing. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.
Disclosure: Cryptocurrency based Exchange Traded Products (ETPs)
Cryptocurrency based Exchange Traded Products (ETPs) are high risk and speculative. Cryptocurrency ETPs are not suitable for all investors. You may lose your entire investment. For more information please view the RISK DISCLOSURE REGARDING COMPLEX OR LEVERAGED EXCHANGE TRADED PRODUCTS.
Disclosure: Forex
There is a substantial risk of loss in foreign exchange trading. The settlement date of foreign exchange trades can vary due to time zone differences and bank holidays. When trading across foreign exchange markets, this may necessitate borrowing funds to settle foreign exchange trades. The interest rate on borrowed funds must be considered when computing the cost of trades across multiple markets.
Join The Conversation
If you have a general question, it may already be covered in our FAQs. If you have an account-specific question or concern, please reach out to Client Services.