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Diagnostic Analysis to Determine the Relationship Between the Stock Market and the Cryptocurrency…

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Tunmise Olabiyi

This analysis was focused on identifying any form of relationship between cryptocurrencies and company stocks traded on popular exchanges.

Three datasets were used for this analysis. The first is a compiled data of 100 cryptocurrencies with relevant information about their prices, the volume traded, and market capitalization daily for 14 years (2007 to 2021). The second is a compiled list of the overall prices of stocks on 7 different exchanges and the volume of stocks traded daily for 7 years (2014 to 2021). The final dataset used was a record of the forecast for a few macroeconomic indicators for 8 years (2013 to 2021).

These datasets were downloaded from Kaggle and thereafter processed for analysis using R. the only dataset that was in the same form it was downloaded was the dataset on macroeconomic forecasts.

For the cryptocurrency dataset, the file downloaded had 100 CSV files of different cryptocurrencies. These were merged and efficiently labeled using R Studio. Upon assertation that the cryptocurrency dataset was ready for analysis, it was exported out of R Studio as a CSV file.

For the Stock Exchange dataset, the file downloaded had 7 CSV files of different cryptocurrencies. These were also merged the same way the cryptocurrencies dataset were merged in R Studio and thereafter exported as a single CSV file into the working folder.

The objective of this project was to determine if there is any correlation between the movement of the stock market and the cryptocurrency market. Do fluctuations in volumes of stocks transacted on stock exchanges influence volumes or prices of cryptocurrencies traded over the same period?

These datasets were visualized using line charts to understand the structure of the trends and determine the relationships between any of them.

To effectively do this, we utilized the economic indicators dataset to determine how both the stock market and cryptocurrency market responded to predicted market conditions at different periods.

To simplify this report, the visuals have been restricted to display just two years of data, 2020 and 2021. But the inferences apply to the entire dataset.

To also simplify our analysis and visualization, we handpicked the top four cryptocurrencies based on market capitalization (Bitcoin, Etherum, USDT, and Solana). The same thing was done for the stock exchanges, the top four were handpicked based on market capitalization as well (SSE, FYSE, DAX, and Nasdaq).

The visuals are presented in five sections according to the different indicators chosen. The first graph under each section describes the trend of the prediction made for the macroeconomic indicator for a specified period and thereafter shows the trend of cryptocurrency and the stock market within the same period.

Source: https://tunmiseolabiyi09.medium.com/diagnostic-analysis-to-determine-the-relationship-between-the-stock-market-and-the-cryptocurrency-df01c747068b?source=rss——cryptocurrency-5

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