What is the Baltic Dry Index (BDI) and what does bitcoin have to do with it?
The index is a tool for measuring business activity in the world, and actually tracks the cost of shipping in the world by different classes of ships. Why does an investor or a mid-term trader need it? It can be used to forecast the demand for international maritime transportation, as well as business activity in the economy. You can see on the chart that the index actually predicted a covid collapse in 2020, and in 2008 the index also reflected the crisis in the economy with its fall, but with a slight lag.
Today we can see that the index is in a local uptrend, on the breakdown of the downtrend, after the rebound from the bottom in February, based on the past behavior of the index, we can conclude that the uptrend should continue in order to continue the economic growth.
What does bitcoin have to do with it? Bitcoin by its class belongs to the risky assets, I would even say to the super risky assets. Its movements in the market largely coincide with the U.S. stock market, especially to the small capitalization shares (small cap), this class of shares grows when investors do not see threats to their investments and there is a so-called risk on, risky investments are more sensitive to the economic situation.
This year on the chart we see that bitcoin supports the local growth of the index, but also with a lag, as the growth of bitcoin began before the rebound in the index.
Conclusion - the BDI index, will be useful to understand the economic situation in the market, and to understand the mood of investors to choose a strategy for investment or to enter the long / medium term position.
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The index is a tool for measuring business activity in the world, and actually tracks the cost of shipping in the world by different classes of ships. Why does an investor or a mid-term trader need it? It can be used to forecast the demand for international maritime transportation, as well as business activity in the economy. You can see on the chart that the index actually predicted a covid collapse in 2020, and in 2008 the index also reflected the crisis in the economy with its fall, but with a slight lag.
Today we can see that the index is in a local uptrend, on the breakdown of the downtrend, after the rebound from the bottom in February, based on the past behavior of the index, we can conclude that the uptrend should continue in order to continue the economic growth.
What does bitcoin have to do with it? Bitcoin by its class belongs to the risky assets, I would even say to the super risky assets. Its movements in the market largely coincide with the U.S. stock market, especially to the small capitalization shares (small cap), this class of shares grows when investors do not see threats to their investments and there is a so-called risk on, risky investments are more sensitive to the economic situation.
This year on the chart we see that bitcoin supports the local growth of the index, but also with a lag, as the growth of bitcoin began before the rebound in the index.
Conclusion - the BDI index, will be useful to understand the economic situation in the market, and to understand the mood of investors to choose a strategy for investment or to enter the long / medium term position.
Support for the author subscribe ✅ and start rocket 🚀.
Good luck and profit to all.
