Video lesson · ChartMacro Correlation: how to read and use it
Crypto correlation with stocks, gold and oil — how closely the coin moves with stocks, gold or oil. The lesson takes 2:12; its full text is below the video.
Narrated in Russian. English subtitles are on by default.
Macro Correlation in short
What does Macro Correlation show?
An area under the chart shows the rolling correlation of the chart's coin with a chosen asset: S&P 500, Nasdaq 100, gold, silver, WTI or Brent oil, Nvidia, Strategy or Coinbase. Lines at +0.5, 0 and −0.5 help judge how strong the link is.
How to read Macro Correlation?
- Above +0.5 the coin moves together with the asset.
- Around zero there is no noticeable link.
- Below −0.5 the coin moves the opposite way.
How to use Macro Correlation?
- When correlation with stocks is high, pay attention to the US stock market open and to US market news.
- Falling correlation shows the coin moving on its own.
- History is limited: for some assets it goes back only a short time.
What do you often see on Macro Correlation?
- Stretches of strong correlation with equity indices alternate with periods when crypto goes its own way.
- When correlation with stocks is high, the US open and US news usually move the coin more.
- Correlation describes a past window and says nothing about who leads; moving 'the same way' can still mean very different sizes.
- Describes the market's state, not its direction: on its own it does not tell you where price goes next.
Where can I find Macro Correlation?
In the Liqwall terminal: the Indicators button, the Chart section, Macro Correlation. The “Open in the terminal” button on this page opens the chart with it already added.
Lesson text
0:00What Macro Correlation is
Is bitcoin today crypto, or Nasdaq? Macro Correlation answers this question with a single line. How closely does the coin move with stocks, gold or oil?
0:12How to add Macro Correlation to the chart
Open the indicator list, go to the Chart section and select Macro Correlation. The indicator appears in a separate panel under the chart.
0:21How to read Macro Correlation
The line runs from minus one to plus one. Above plus 0.5 the coin moves together with the asset. Around zero the coin lives its own life. Below minus 0.5 it moves in the opposite direction. Three horizontal lines help you gauge the strength of the link at once.
0:40Macro Correlation settings
In the Asset setting, choose the asset to compare with. S&P 500, Nasdaq 100, gold, silver, oil and individual stocks. Length sets over how many candles the link is calculated. Shorter reacts faster, longer is calmer.
0:57An example on a real chart
Let's look at the last two months. From mid-August to mid-September the link with Nasdaq 100 stayed around zero. In those weeks bitcoin rose from 63 to 79 thousand dollars. On its own, without looking at stocks.
And in early October the line rose above plus 0.9, and the coin began to respond to the index. On October 12, Nasdaq 100 lost more than one percent, and bitcoin fell from 83,700 to 81,800. On October 14 the index fell almost 3%, and bitcoin also went down to 81,600. In those same days the link with gold stood near minus 0.5.
1:42What to pair Macro Correlation with
When the link with stocks is high, turn on Sessions. The New York open becomes the main time of the day. ETF Flows from the Signals section will show whether money is flowing into the funds. And Market Mood — what the overall crypto market backdrop is next to the outside market.
2:00The takeaway
Know who your coin moves with, and you know which news to watch. Macro Correlation is in the Liqwall terminal, in the Chart section.
Add the indicator to the chart and look at it on your own coin.Free account — no card needed.