In this video, I discuss why cryptocurrencies tend to all move up or down together on a daily basis-- i.e. why they are positively correlated.
There are two main reasons for this:
1) Large investors tend to trade baskets of cryptos, just as they do with stocks (stock indices). What this means is that they tend to be buying lots of cryptos at the same time, or selling lots of cryptos at the same time, usually on a market-cap weighted basis.
2) This has been exacerbated in recent years by central bank money printing, which leads to oscillations between "risk-on" and "risk-off" environments. This helps to explain why stocks and cryptos tend to move up or down together.
Shorter-term correlations mean nothing over long periods of time. Some companies and cryptos will succeed and take market share; some will fail and disappear.
I am most bullish on BTC and ETH.
Not investment advice! Consult a financial adviser.
Crypto daily price changes:
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Chart of BTC and ETH:
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What is correlation?
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Crypto rolling 90-day correlation:
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Grayscale Digital Large Cap Fund:
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Are Bitcoin and stocks correlated?
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Matthew Kratter is the author of the Amazon best-seller "A Beginner's Guide to the Stock Market":
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If you like my teaching style and would like to learn more about investing and trading stocks, options, and futures, be sure to check out my online courses here:
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#Bitcoin
#Cryptocurrencies
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