Thread by @signal2noisebtc

#Bitcoin

Hey, my favorite $BTC "Analyst" just educated me that higher 10Y yields will drive #BTC up.

Now Yield are even breaking out but $BTC is down?

I told you before, these guys are absolutely clueless about #Macro.

🧵Thread 👇

https://twitter.com/signal2noisebtc/status/1477945846750760965

First, technically speaking, as shown in the previous tweet, correlations change over time and are not consistent. Just because some guys hold two chart patterns next to each other has nothing to do with long-term correlations. Correlations can change rapidly.

Second, correlation is not causation. Yields do not drive BTC, macro factors drive yields AND BTC. Yield and BTC moves are a RESULT.
After March 2020 monetary and fiscal policy stimulated everything. This means: risk on. Sell LT bonds (yields up), buy risky tech and crypto etc

Now there is monetary tightening (ST yields up, liq. down), this is shifting risk appetite, high growth tech (ARKK) and crypto sell off. But there is still solid growth and inflation in the economy, so all together even LT yields keep still going up.

In traditional markets this is often a period where value stocks outperform growth, esp. after everyone was overweight growth in such a extreme manner. This does not mean the end of the stock market but a shift in its sub-segments. The whole 2002 to 2007 cycle was value driven!

In order to be successful you need to read books and follow the right people and learn about causation and reaction functions. If you only put similar chart patterns next to each other without understanding them you won't improve your skills.

If growth and esp. inflation would cool off and LT yields would come down as a result and the central bank gets more cautious on tightening, tech und #BTC could even run again. So just the opposite correlation. This is BTW my macro assumption, which I have described.

This would cause a similar reaction like just now - just in the opposite direction. I just think the system is very fragile under the hood and that growth will rather surprise to the downside and not stay strong and be able to tolerate higher yields.

We will see. I hope you excuse my sarcastic tone above. I'm a very polite guy and always respect different opinions, but what I do not like is spreading of nonsense and misinformation.