Renminbi & Bitcoin

I am NOT an expert in crypto currencies. I do NOT intend to be one. I do NOT invest / trade in what I do NOT understand. However, I am really curious to find out more about Bitcoin (BTC) from a statistical viewpoint.

Strictly for educational purpose

Hypothetically, what variables may have direct relationship with BTC? I always think that Bitcoin could mirror the movements in Gold (due to similar nature of scarcity, precious commodity and etc). In addition, I also believe that the rise in BTC may be attributable to the massive funds outflow from China in the past 1-2 years. Let’s consider two variables: Gold & Renminbi

Time Series .png

Visually, the above graph shows that there is some “direct relationship” between USDCNY and BTC. The relationship appears weak for Gold and BTC.

Gold & BTC

BTC vs Gold.png

Based on the above regression analysis, it is quite clear that the relationship between Gold and BTC is relatively weak (since year 2015), with a low r-squared value.

 

BTC vs RMB.png

As shown above, the relationship is relatively stronger between USDCNY and BTC. This may part validate the fact that there is massive outflow of funds from China to BTC.

Forecast BTC.png

Using the regression relationship between USDCNY and BTC, the above forecast analysis shows that the actual value of BTC is way above the forecasted range of BTC. Hence, this signifies potential higher risk of overvaluation.

Only time will tell…… whether it will be another tulip mania (http://www.cnbc.com/2017/07/20/bitcoin-bubble-dwarfs-tulip-mania-from-400-years-ago-elliott-wave.html)?

DISCLAIMER

  • THIS IS A PERSONAL BLOG Of KEN UTAU AND SHALL NOT BE RELIED IN WHATSOEVER MANNER BY ANYONE. 
  • ALL ARTICLES CONTAINED IN THIS SITE ARE STRICTLY FOR INFORMATION AND ILLUSTRATIVE PURPOSES ONLY AND DOES NOT PURPORT TO SHOW ACTUAL RESULTS.
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Author: Ken Utau

Data Scientist, Markets Analyst and Food Lover

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