An analyst has explained that a pattern on the Grayscale bitcoin Trust (GBTC) could suggest that a possible 50% rise is coming for btc.
bitcoin and GBTC have experienced decoupling in recent months
in a new mail In X, analyst James V. Straten has analyzed the correlation between GBTC and btc that has been present over the years. Grayscale bitcoin Trust is an investment vehicle that holds bitcoin and allows exposure to these holdings through its shares.
The chart below shows the trend in the percentage performance of bitcoin and GBTC, as well as the correlation coefficient between them, over the past year.
<img decoding="async" class="alignnone aligncenter" src="https://technicalterrence.com/wp-content/uploads/2023/10/Bitcoin-Could-See-a-50-Rise-Based-on-This-Analyst.jpeg" alt="bitcoin and GBTC” width=”1542″ height=”969″ loading=”lazy”/>
Looks like the two assets have diverged recently | Source: @jimmyvs24 on X
The “correlation coefficient” here refers to a metric that tells us how linked the prices of any two assets are. When this metric has a positive value, given products show positive correlations as they replicate each other’s moves. The closer the metric is to 1, the stronger this relationship will be.
On the other hand, negative values imply that assets respond to each other’s movements by moving in the opposite direction. The strongest negative correlation occurs with a value of -1.
Naturally, when the correlation coefficient is close to zero, there is no correlation between commodities, since their prices move independently.
From the graph above, it is clear that bitcoin and GBTC have often had a correlation coefficient close to 1, implying that there has been a strong positive correlation between the two.
There have been some temporary periods of deviation, mainly during cryptocurrency price drops and other major events like the SVB collapse. However, the correlation returned to normal shortly after.
Straten says this correlation is especially striking over a five-year period, where it is as high as 100%. However, the analyst also points out that both assets have been decoupled since June.
As can be seen from the chart, GBTC has enjoyed a strong uptrend recently, while btc has remained virtually flat. GBTC’s performance currently stands at +81% over the past year, while bitcoin is up approximately 43%.
“GBTC will be the first to be approved for the spot ETF before Blackrock and others,” says Straten, referring to what British HODL, another analyst previously said. “The price action agrees with this. Regardless of whether it’s late Q3 or early Q4, it’s a six-month window from now.”
Based on this, the analyst believes that bitcoin will have to close the gap created between it and GBTC since June, which would mean a price jump of around 50%, or GBTC would have to move down towards btc. However, Straten believes the latter scenario is unlikely.
btc Price
bitcoin has declined in recent days as its price has fallen to just $27,100.
<img decoding="async" class="alignnone size-medium aligncenter" src="https://technicalterrence.com/wp-content/uploads/2023/10/Bitcoin-Could-See-a-50-Rise-Based-on-This-Analyst" alt="bitcoin price chart” width=”1534″ height=”869″ loading=”lazy”/>
btc has been going down during the last few days | Source: BTCUSD on TradingView
Featured image from Shutterstock.com, charts from TradingView.com
