Thread by @BMBernstein

Since the end of 2017 when crypto hit the mainstream and was plastered on CNBC 24/7, crypto may have officially become more closely tied to the traditional markets

The chart below shows BTC outflows vs ETF inflows (they are opposites to show the tie. ETFs inflows / BTC outflows)

Through december 2017, it doesn’t look like there’s much correlation at all between the two.

But starting in Jan, some of the months had curiously similar flows. In January, $66bn flowed out of ETFs and $67bn flowed into BTC

In Feb the opposite happened with $12bn out of ETFs and $8bn into BTC. And in May, $30bn out of BTC and $23bn into ETFs

If this holds true going forward, it will be driven by the returns / sentiment of both markets. January, which coincided with the largest outflows of BTC was a very strong month for the S&P, returning 4.7%.

Feb was the opposite, with the S&P down 4%.

This definitely isn’t conclusive. Obviously a lot of these btc outflows also went into altcoins. And the sample size is low.

But logically, as crypto grows in size, its coevolution with the equity market would make sense.

Sample size is low here too, but BTC and GLD also have been increasingly correlated(BTC candles, GLD is in red)

Given the similar macro thesis behind both, I'd expect this correlation to initially be high too.Over the long run though, to succeed BTC needs to take demand from GLD

With regards to equity markets, I’m starting to think a blow off top is more and more likely. Sentiment is extremely bearish. Nasdaq shorts are near all time highs.

There’s a significant amount of cash on the sidelines. Investors are historically underweight US equities

EM markets and China are also slowing and the EU markets are showing some cracks. US relative strength could potentially drive an influx of capital into the USD and US equity markets, and if this is the case cash on the sidelines likely piles into momentum driven equities.

Commodities priced in USD, including BTC, would get hurt as a result. And S&P / tech driven equities returns may take demand from BTC.

This is a WIP, but a macro / equity thesis is an increasingly pivotal part of investing in crypto

h/t @cryptorae
data from @EricBalchunas