Observations on the relationship between BTC and NSR price

It appears there is a tendency of Bitcoin and NuShares to have their prices move inversely: When Bitcoin goes up, NuShares tend to decline. When Bitcoin drops rapidly or gradually, NuShares tend to rise in price. The evidence for this relationship consists of a very small sample of results, combined with compounding factors that obscure the relationship in some cases.

NuShares were never higher than when Bitcoin plummeted under $200 in February 2015. The NuShare price spiked on high volume at that time.

While the Bitcoin price is only one of many important factors controlling the NSR price, to the extent there is causal relationship between them, it appears to work like this: As the Bitcoin price begins to rise, some NuBit holders sell their stable currency to chase the momentum in Bitcoin. The beginning of a Bitcoin rally is negative for NBT adoption and NSR price (as NSR price tends to move the same direction as NBT circulating supply). As the Bitcoin rally gets mature, people begin to look for ways to cash out and lock in gains. This typically leads some to buy NuBits. Once a bear market takes over sentiment in the Bitcoin space, the shift into NuBits accelerates. Some BTC funds also find their way into NSR because it is an arguably under priced diversification at this point in the cycle.

This means the best place in the Bitcoin price cycle to be from the perspective of NuShare holders is at the beginning of a Bitcoin bear market, where the bear market starts from a very high level. The Bitcoin bull market doesn’t benefit us directly, but it does set up the situation where we can have a Bitcoin bear market starting from a high level.

In the last two Bitcoin spikes, other factors appeared to distort the relationships I have described above. In late May a Bitcoin rally began. As expected, NSR price and NBT supply both declined as an immediate consequence. There was a Bitcoin bear market that followed, but NuShares and the NuBit circulating supply did not rise due to the extremely disruptive nature of the destructive Augeas rebellion against NuShare and NuBit holders. It was unfortunate timing for NuShare holders. Another Bitcoin rally culminated on January 5th, after which Bitcoin had a fast and spectacular decline, just the sort of event that tends to increase NBT supply and NSR price. Unfortunately, that Bitcoin bear market started on the exact day US-NBT was delisted on Poloniex, where more than 95% of US-NBT volume took place. As a result, the tendency did not express itself.

Yet another Bitcoin rally is underway. NSR has declined recently in Bitcoin, and slightly in USD in recent days. A bear market in Bitcoin is likely to emerge soon. This time, unlike the last two times, it appears unlikely that any sort of crisis or negative event will obscure the tendency of NSR price and NBT supply to rise in a Bitcoin bear market. At least that is my hope and expectation. However, the history of Nu shows that no one can predict the future.