Several equities exhibit a positive correlation with the price of Bitcoin, and can be traded on U.S. stock exchanges as a proxy.
One notable example is Coinbase (COIN – Nasdaq), one of the largest digital currency exchanges in the United States, which facilitates the buying, selling, storing, and transferring of cryptocurrency.
The 60-day rolling correlation coefficient between Bitcoin (BTCUSD) and Coinbase (COIN) is approximately 0.70.
When we overlay the line charts of both Bitcoin and Coinbase, the positive correlation between the two becomes evident over time:
Bitcoin (BTCUSD) vs Coinbase (COIN)
Therefore, as an alternative to trading or investing in Bitcoin through cryptocurrency exchanges, we can replicate similar correlations in the equity markets by trading highly correlated assets, such as Coinbase (COIN) on the Nasdaq.
As with any trend, there is one trading tool we use to keep tabs on this one – and find other trade opportunities as well…
Happy Trading!
