,
8 tweets,
4 min read
Read on Twitter
1\ @100trillionUSD published a very interesting article in which he quantified the relation between the natural logarithm of bitcoin's price and the natural logarithm of bitcoin's stock to flow ratio.
medium.com/@100trillionUS…
medium.com/@100trillionUS…
2\ In my first review of his work I discussed how the underlying assumptions for OLS regression were not met and concluded that the model was flawed and would not be useful at all.
medium.com/burgercrypto-c…
medium.com/burgercrypto-c…
3\ Ta Da......plot twist as @phraudsta mentioned the concept of cointegration. Something I learned about in uni as an exceptional case and never used myself again since.
Though I realised, it could be very useful in setting up (proxy) hedges.
medium.com/altcoin-magazi…
Though I realised, it could be very useful in setting up (proxy) hedges.
medium.com/altcoin-magazi…
4\ The piece written by Nick could mean that my first conclusion could possibly be falsified. We both worked with different datasets and with different tools, so running a cointegration test myself was the only way to go.
5\ So, here is my last article that shows the results of my research, but also let you go through the code; Jupyter notebook is included in the Appendix of the article.
medium.com/burgercrypto-c…
medium.com/burgercrypto-c…
6\ Most important part is the conclusion! There is a quantifiable relation between bitcoins stock-to-flow ratio and its price! @100trillionUSD's original work is eventually proven valid!
And guess what....
The stock-to-flow-ratio is about to get a boost in May 2020
And guess what....
The stock-to-flow-ratio is about to get a boost in May 2020
@phraudsta I have been engaged in the field of hedging interest rate risk for quite some time, but never thought of this approach. Something I would love to have a closer look at.
@100trillionUSD 6-7\ Continuation of the thread here. Accidentally messed it up.
