Bitcoin prices have been incredibly volatile in recent months. To shed some light on what might influence or be influenced by these shifts, we built a bitcoin correlator that lets you correlate data from anywhere on the web with the current price of bitcoin. We know that calculating correlations based on 1 or 2 days of data is effectively useless. But this is a seed, and in 15, or 30 days you could start to see something interesting.
The chart below shows the normalized value of bitcoin and the indicator you are correlating against over time. The Y axis values are normalized linearly, with 1 representing the maximum value, and 0 the minimum. Data is monitored on 5 minute intervals. As time goes on, higher maxima and minima will be observed, and the normalization will adjust. The correlation coefficient† shown on the right varies between +1 and -1 depending on the strength of the correlation or anticorrelation. Higher absolute values indicate stronger correlations.
Correlations become more meaningful over time, as more data is collected from the API. This is not intended as a trading tool, but rather as an example of the types of insights you can tease out from data trapped across websites by using kimono. For example, see how the price of bitcoin tracks with the price of gold or other crypto currencies like Litecoin. Or, watch classic supply and demand in action by comparing bitcoin price with bitcoin supply.
† We use a Pearson product-moment correlation coefficient, which is defined as the covariance of the price of bitcoin with your chosen indicator divided by the product of the standard deviations of the bitcoin price and the indicator. As historical data is added (every 5 minutes) the correlation coefficient will become more meaningful, since it is built off of historic data. Read more about this correlation coefficient on wikipedia.
Disclaimer: Kimono is not a finance company. Nothing on this page represents financial recommendations. Correlation doesn't necessarily mean causation. Be careful when using correlations to draw causal inferences for trading or research.