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Bitcoin Performs Best When Stocks are Closed, finds Bespoke

An analyst for Bespoke Investment Group has discovered that Bitcoin trades better outside of stock market trading hours.

Nearly all of the coin’s gains since the pandemic started have occurred after equity markets had closed.

  • Speaking with Bloomberg News, Jake Gordon from Bespoke outlined a strategy that would have yielded 270% gains since early 2020. It involves simply buying Bitcoin at the equity market close (4 pm) and selling at the next day’s open (9:30 am).
  • Unlike traditional markets, crypto markets are open 24 hours a day, including weekends, on most exchanges. However, the opening times of the traditional market are known to impact the price of crypto.
  • Gordon’s argument is partly contradictory to what Charles Edwards – Founder of Capriole Investments – observed in August 2020. He argued that Monday morning is a good time to buy, right before traditional markets open again.
  • By contrast, Gordon said that buying when the market opened and selling when it closed would have produced negative returns.
  • Furthermore, Bitcoin has appeared to perform positively over the weekends. During weekdays, it has traded flat before market hours, and declines when stock trading begins.
  • “The bulk of Bitcoin’s gains have come outside of regular trading hours for US equities,” wrote Gordon in a note to Bloomberg.
  • The hypothetical trading strategy reflects how sensitive Bitcoin is to moves within the equities market. The top crypto’s 90-day correlation to the S&P 500 ran as high as 0.49 in March – the highest in 17 months.
  • As such, Bitcoin has a strong tendency to react to Federal Reserve policy. The crypto market tanked last month only days after the Fed announced an interest rate hike of 50 basis points.
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Mike Novogratz – CEO of Galaxy Digital – warned last month that investors shouldn’t “pick a bottom”, given the severity of Bitcoin’s latest declines.

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