Indicator Overview

The MSTR-BTC Correlation Index calculates the rolling Pearson Correlation Coefficient between two crypto assets, visualised on a dynamic gradient. The index oscillates between +1.0 (Deep Green), indicating perfect positive correlation where assets move in lockstep, and -1.0 (Deep Red), signaling perfect inverse correlation.

This provides a quantitative measure of how closely two assets are coupled over a specific lookback window. The price of MSTR is overlaid on a secondary logarithmic axis, allowing traders to observe price action simultaneously with shifts in asset synchronisation to identify decoupling events or rotational regimes.

How To Use

Deep green zones near +1.0 often signal high-confidence market trends where assets move together, whereas a shift toward yellow or red indicates a breakdown in that relationship. Traders look for correlation peaks as a sign of unified market momentum and correlation troughs (divergence) as early signals of rotation, where capital may be flowing out of one asset and into another.

Monitoring the zero-line is critical; a move from positive to negative correlation suggests the assets have become hedges against one another. Use the SMA toggle to smooth out volatility in the correlation reading, helping to identify the underlying trend of the relationship. When correlation drops while MSTR price remains strong, it may indicate independent strength and a potential breakout from the broader market's influence.