Cherry Picks

We Looked at Five Years of Data—Here's What Happens When Bitcoin Moves

By:Michael "Dr. Data" Rechenthin

Will the exception prove the rule?

We looked at the past five years of daily Bitcoin moves and what tends to happen to the S&P 500 during those days. In general, there is little correlation between bitcoin and the S&P 500. An exception occurs when bitcoin makes a large move to the upside (+5%) or more to the downside (less than -5%).

Asset vs. Bitcoin Daily Percentage Change

When bitcoin's price movement is > 5%:

  • Average change of the S&P 500: 0.42%

  • Median change of S&P 500: 0.19%

  • Standard deviation: 1.53%

When bitcoin's price movement is < -5%:

  • Average change of S&P 500: -0.67%

  • Median change of S&P 500: -0.34%

  • Standard deviation: 2.31%

Other days:

  • Average change of S&P 500: 0.09%

  • Median change of S&P 500: 0.11%

  • Standard deviation: 1.11%

The iShares Bitcoin ETF (IBIT) is a popular way to play bitcoin

Bitcoin chart
Approximately 1700 shares of IBIT equal 1 bitcoin

Coinbase (COIN) is another way of playing the price of bitcoin. Its volatility is considerably higher. MicroStrategy (MSTR), which we'll dive into more, offers another choice—its options market is wild, so it's not for everyone.

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Bitcoin and Ethereum are available on the tastytrade platform (Cryptocurrency commissions capped at $10, per order ticket). The tastycrypto wallet allows for access to tokens available only on-chain!

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MSTR's bitcoin bet is not for the faint of heart!

MicroStrategy (MSTR) is a $32 billion capitalization company that “is a pioneering entity in the realm of business intelligence (BI), mobile software, and cloud-based solutions, leverages cutting-edge technology to facilitate data-driven decision-making processes and mobile application development”.

Eye roll. That description sounds like every company right now.

What makes it unusual is that it has become a sort of proxy for Bitcoin due to its propensity to purchase substantial amounts of coin over the years. Talk about daring.

6 month returns

The options are very rich now—the ATM options are 150%.

MSTR - OTM strike prices vs. option prices

We personally wouldn’t even think about trading this stock without defining our risk.

COIN Trade Idea: COIN broken wing butterfly (APR)

The high-flying bitcoin proxy has significant call skew, which lends itself to strategies like broken wing butterflies or ratio spreads because the relative cost of the long spread is much cheaper compared to the non-skewed side, along with the higher OTM premium on the skewed side.

Long the 300 call, short 2x the 325, and long the 370 calls in the APR monthly expiration in a wide, high potential profit position that plays into the upside skew with no risk to the downside.


Michael Rechenthin, Ph.D., (aka “Dr. Data”), managing director of research and development, has 25 years of trading and markets experience. He is best known for his weekly Cherry Picks newsletter. On Thursdays, he appears onTrades from the Research Team LIVE.

Nick Battista, tastylive director of market intelligence, has a decade of trading experience. He appears Monday-Friday on Options Trading Concepts Live. On Wednesdays, he co-hosts Johnny Trades. @tradernickybat

For live daily programming, market news and commentary, visit tastylive or the YouTube channels tastylive (for options traders), and tastyliveTrending for stocks, futures, forex & macro.

Trade with a better broker, open a tastytrade account today. tastylive, Inc. and tastytrade, Inc. are separate but affiliated companies.

Options involve risk and are not suitable for all investors. Please read Characteristics and Risks of Standardized Options before deciding to invest in options.

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