Does Crypto correlate most with USDCNY, with a 4 week lag?
Please read this explainer to understand the chart. @TradingView suggested we could compare performance of TOTAL with global stock indices. I started looking into this but realized that Bitcoin/crypto is influenced by currencies and rates more than by stock markets, and there is much written about China as "controller" in the cryptosphere. I skipped gold since major ETFs are based on futures.
My chart begins in Oct. 2020 because the Chinese Yuan correlation has become stronger more recently and because crypto has gone up so much that it was difficult to show more history with relative performance. Labels on the right of chart indicate what each line represents. I removed y-axis scales to focus on the graph and simplify the visual.
I added U.S. SPX (blue) to see if there was a correlation to crypto price movement but it was not obvious. BTC (yellow) follows TOTAL closely enough and here I will focus on total crypto market cap. As China controls the strength of its yuan partly through its total social financing (TSF, stimulus), this has affected its stock market (CSI 300, in red) and crypto market cap (green). This article explains the more recent connection between CNY, USDT, and Bitcoin and helps us understand the connections very well:
www.coindesk.com/sho...china-tether-premium
What I found is that TOTAL (and BTC) lag USDCNY by one month. When USDCNY (purple) drops there is a rise in China markets (red) and about 4 weeks later there is a rise in TOTAL. This is an inverse relationship. Here are details about the numbered points:
1, 2 - each time USDCNY fell there was a sustained rise in crypto
3 - USDCNY fell to a key level and consolidated (aqua dotted line), Chinese market took a pause and crypto consolidated after a sharp rise
4,5 - USDCNY fell sharply below key level, which saw a sharp rise in CSI-300 and, one month later, crypto began its tremendous rise
6 - USDCNY spikes up, China's market drops - does this mean BTC and crypto will soon be lower? (this change corresponds with China reducing TSF)
7 - USDCNY has risen back up the key level, and China's market went negative for 2021 - will crypto also break the white dashed line and go lower?
*** I have noted 3 points of bearish divergence on RSI
My chart begins in Oct. 2020 because the Chinese Yuan correlation has become stronger more recently and because crypto has gone up so much that it was difficult to show more history with relative performance. Labels on the right of chart indicate what each line represents. I removed y-axis scales to focus on the graph and simplify the visual.
I added U.S. SPX (blue) to see if there was a correlation to crypto price movement but it was not obvious. BTC (yellow) follows TOTAL closely enough and here I will focus on total crypto market cap. As China controls the strength of its yuan partly through its total social financing (TSF, stimulus), this has affected its stock market (CSI 300, in red) and crypto market cap (green). This article explains the more recent connection between CNY, USDT, and Bitcoin and helps us understand the connections very well:
www.coindesk.com/sho...china-tether-premium
What I found is that TOTAL (and BTC) lag USDCNY by one month. When USDCNY (purple) drops there is a rise in China markets (red) and about 4 weeks later there is a rise in TOTAL. This is an inverse relationship. Here are details about the numbered points:
1, 2 - each time USDCNY fell there was a sustained rise in crypto
3 - USDCNY fell to a key level and consolidated (aqua dotted line), Chinese market took a pause and crypto consolidated after a sharp rise
4,5 - USDCNY fell sharply below key level, which saw a sharp rise in CSI-300 and, one month later, crypto began its tremendous rise
6 - USDCNY spikes up, China's market drops - does this mean BTC and crypto will soon be lower? (this change corresponds with China reducing TSF)
7 - USDCNY has risen back up the key level, and China's market went negative for 2021 - will crypto also break the white dashed line and go lower?
*** I have noted 3 points of bearish divergence on RSI
Comment:
Cryptos seem to be "on hold" - they will move after today's Fed announcement.