The strange correlation between the title of Overstock and the price of Bitcoin

At a time when it is difficult to find a correlation between cryptocurrencies and any other asset classes, it may surprise you that a public stock is able to track bitcoins.

However, it is exactly what appears to be in the case with t he has quoted the price of Overstock.com (OSTK) and the exchange rate BTC / USD. Furthermore, it is not exactly a short-term coincidence at stake.

Since 2014, the graphs of technical prices between the two resources have developed a striking resemblance, which not only seems to strengthen as the times continue, but this has seen its latest example at the end of last year week, between crypts of the cryptic market.

At the beginning this might seem like a comparison between apples and oranges, but Overstock was actually the first major retailer to accept bitcoin as a form of payment in 2014

While Overstock's businesses have expanded (the company now has a subsidiary dedicated to the blockchain, tZero, which hopes to publicly exchange traditional assets based on blockchain in 2018), it seems that investors in the United States Public markets use it as a proxy for an asset that is not easily able to gain exposure through something like an ETF.

In short, in the eyes of traders, it seems that what is good for bitcoins is good for Overstock value, and vice versa.

Act I: bubbles of 2013 break out

Both OSTK and BTC recorded a tremendous growth in 2014, and both reached a climax and started a steep descent just before the new year.

The respective arrests have developed with some noteworthy coincidences:

  • The first day Overstock accepted payments with bitcoin (01/09/2014) marked the end of the first rescue rally , or "dead cat bounce", "both for bitcoin and OSTK. Both have started a decline of more than 50% in the future (first white block).
  • In May 2014, both have stabilized sideways, followed from a minor recovery (second white block).
  • From mid-September to mid-October, both fell more than 20% and formed V-shaped recoveries in exactly the same time, or it took a couple of days (third white block).
  • The fourth white block presents the official capitulation of BTC which took place on 14 January 2018 when the price drops by more than 30% in a single day Two weeks later, the OSTK fell more than 20% in one day.

BTC has contin was able to break the downward trend in June 2015, long before the OSTK, but the bear market structures remained very similar.

Act II: the races of the bull of 2017

The correlation becomes a bit more interesting when finally the BTC has started a new trend up from the peak of 2013.

As seen in the chart above, BTC started this uptrend in May 2017, which set the stage for a rise of more than 1,500 percent until the end dell & # 39; year. OSTK followed suit and broke its bearish trend just a couple of months later, leading to an increase of over 400% by the end of the year.

Act III: Correlation tightens

[19659002] In 2018, the correlation became so exact that it could no longer be ignored.

The precise occurrence of events began after OSTK and BTC ended their 2017 bull runs in an explosive manner. At that time, everyone reached historical highs almost exactly after a month.

Precise correlations:

  • After the bursting of bubbles, both fell to their first fund on the same day, February 6th.
  • Both would have experienced a rescue rally of which both peaked on 20 February.
  • Rallies were temporary and eventually they touched again in days from one another
  • Last but not least, both prices fell to their lowest 2018 prices in the same day of June 28th. [19659029] Conclusion

    Could it be an elaborate coincidence? Maybe.

    However, it is equally likely that Overstock is now seen by investors more as a cryptocurrency company than an online retailer. With few, if any, ways for the world of traditional finance to invest in cryptocurrencies, perhaps investing in OSTK is the way in which Wall Street invests in the wild world of cryptocurrencies …

    Disclosure: The author retains BTC, AST, REQ, OMG, FUEL, 1st and AMP at the time of writing.

    Prices via Shutterstock; Charts via TradingView

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