Expecting Equity Chopsolidation

An intriguing divergence has opened up between the performance of Bitcoin relative to equity markets in recent months. Perhaps Bitcoin isn't the only asset expecting chopsolidation.

In my time analysing Bitcoin, I’ve increasingly come to the realisation that BTC is one of the more potent, and realistic indicators of market liquidity. Being one of the few free market assets out there, I believe the way it trades is packed full of useful information, which often gets missed across the more ‘managed’ (read: manipulated) traditional markets.

Over recent months, Bitcoin has noticeably under-performed the equity market, and this has me thinking that Bitcoin is trying to tell us something…

In a way, Bitcoin is becoming a powerful index for broader market conditions, and I prefer to listen to it, rather than write off divergences as ‘just a bad day’.

In today’s piece, I want to fly through a couple of charts which explore an early idea I am working through. When I see a stark divergence between equities and Bitcoin, I want to try and separate out whether it is due to internal Bitcoin market structure, or whether there is some hidden signal amidst the noise.

When Bitcoin under-performs equities, I have to ask whether it is due to weakness in the Bitcoin market…or is Bitcoin hinting that equities might be floating around in la-la land?