The Trend’s Your Friend Until It Ends

Tim Knight (Slope of Hope) on sine wave correlations:

“Since cryptos have been on an absolute tear lately, I was curious how Bitcoin correlated with equities. Here, below, is the SPY with its correlation to $BTC beneath. As you can see, right now they’re about as correlated as they can be, with equities and cryptos cheerfully lurching up together. The curious thing is how the correlation is a relatively smooth sine wave, suggestion that these two are going to part ways again and work their way toward being inversely correlated.”

“Going up 100% in just six weeks is a bit much to swallow.”


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