Topic: The bond market affects Bitcoin (Read 142 times)

0 - printers doing brrrr to buy treasury bonds
1- this makes negative real yields on bonds (this push money down)
As of 2017, the size of the worldwide bond market (total debt outstanding) is estimated at $100.13 trillion, 100 trillion is looking for alternative
2- interest on term deposits in banks are close to zero (this push money down)
3- corporate bonds risk of not being paid is bigger than expected ROI (this push money down)
4- inflation and fear of inflation getting bigger and bigger forces people to look for assets that will protect their funds from inflation by accepting even greater and greater risk (because safe assets guarantee a real loss (expected profit - inflation))
5- this push money to real estate makes them super expensive (3-4 % real profit from renting is still not enough to cover inflation)
6- this push money deeper and deeper (stocks and dividend profits) but they are cosmically overvalued and dividends are very small
As of December 31, 2019, the total market capitalization of all stocks worldwide was approximately US$70.75 trillion. so 70 trillion is looking for alternative
7- this push money deeper into very high risk assets (bitcoin) - the profit opportunity is usually better than the loss guarantee - and bitcoin is worth only 300 bil $ so even a small fraction moved from above assets will cause huge pump here.

Thats how everything is connected. And when (or rather if) bonds will start again to give adequate, certain profits part of funds will go back will start going back to the top of the ladder. Where to hide? First of all i don't think you need a place to hide, money moves from asset to asset in cycles ... but, if you need a place to hide... the best asset that almost never go down is long life food and toilet paper

The one thing you need to understand is that investors don’t stay one place, especially those of them who are full-time investors and traders, they don’t just stay one place with one asset and stand by it all the time, when it’s going down they will look for another asset that can hold their money and they invest in it to keep the value increasing.

So, everything is connected in one way or the other, that’s why when one is going down you will see the other going up, because investors have seen that particular one as a better option than the rest so they will keep investing in it so that it goes up.

Perhaps, But in the US considering how Wacky the people are that are issuing bonds, (local governments, state governments, institutions, ect) People would have to be somewhat off kilter to think that the same people that over reacted during the "Pandemic" are the same people who are now saying that bonds rates are rising?  Who trusts those people?  The media broadcasts that Bond yields are up so BTC is down and what happens?   People panic and sell.   Just like today, NY, SEC, files yet another Crypto based lawsuit and BTC goes down.   (ITS a shake down) but watch over the next six to 8 hours as BTC goes down...

The negative debt crisis is coming and cryptocurrencies could be a useful tool for investors in the event of a market downturn.Of course equities are still producing solid returns for retail and institutional investors alike.

Sooner or later it will. Bitcoin is not anymore the fully independent market we used to know years ago. With Bitcoin's entry into the mainstream world of finance, the same big traditional players are already into it.

But I guess the correlation will not be a positive one all of the time. Sometimes it would be negative correlation depending on the circumstances. After all, we all know that the whales' investments are in and out of different assets. Their funds are always shifting from one investment to another, again, depending on the circumstances. Sometimes the bulk of a certain investor's funds are on gold, sometimes it shifts to bonds, and then shifts again to stocks, and then settles with Bitcoin for a while, but then moves on to another asset afterward, and so on and so forth.

I guess this will become the norm with Bitcoin fast becoming an acceptable asset and one of the common investment options among the largest players in the world.

To answer OP's question, I would recommend people look into the quantity of bonds owned by the federal reserve. The amount of QE stimulus liquidity the fed is injecting into banks in an effort to stabilize stocks and assorted markets. In addition to how much american debt is being amassed to bailout foreign banks and markets. It is also possible significant amounts of cryptocurrency are being swallowed up by QE trickle down buyouts from banks, hedge funds and other institutions.

Traditional observations of market behavior in stocks, bonds and other assets have not applied for some time now. There has been a divergence which appears to have gone unnoticed.

The effect depends on supply and demand, which is easy to manipulate due to the small market capacity compared to the market capacity of bond, stock or fiat money markets.

You will begin to notice more correlation as more and more investors join to the market then the change of supply and demand based on the money they may be manipulating will be more than what is happening now.

In general, the Bitcoin market does not have geographical boundaries, so in the future we will see a clear impact of global changes and a lesser impact of what is happening in countries.

At this time where bitcoin has already gain power and reputation, the connection between those other investments are obviously present. Though they have different properties as an assets or investments but the connection that relies the price inflation rates has been seen already.
 
 Institutional investors also look for the new investment which is cryptocurrency  where in they can benefit from the sudden inflation  movements compare to that of gold.

This connection could be a result of chance. If there was really a "connection" then we would see evidence for that connection not just once but several times before this event as well.

Now although I am always for buying bitcoin at low prices, I also advice people to buy in on sectors that are different from crypto - so that you have something to rely on in case bitcoin drops by some thousand dollars and this can reduce the impact on your mind that you are going rekt.

I would agree that institutions seem to be buying everything, maybe as a result of the Musk craze but who know when they will start selling and you might not be able to any connection.

"Everything is connected" - Nope, that statement is for conspiracy theorists. Not sane people.

The connection is already strong to say the exact fact. The connection is tied on USD and bitcoin. Bitcoin bull is getting the value dollar not to have strength against other major pairs. If you look with the pairing of some major fiat with dollar, I think it isn't bull for dollar. Bitcoin investment means a lot of dollar is going to be exchanged for bitcoin and that is why I think the connection is affecting the dollar. Another reason here to say is that in the other side, exchange one bitcoin to dollar causes increase rate of inflation because more money will be in circulation.

i don't think it is connected or will ever be connected. even less so as bitcoin market size grows globally. in other markets such as any of the traditional (local) markets such as stocks, they are all connected to each other because they are all in one place and have pretty much the same players.
at the same time bitcoin market is a 24/7 global market and if stock market in a country tanks it won't have any effects on bitcoin price because the stock market of other countries didn't tank and even if they did there is still a good chance that since people see bitcoin as this disconnected market they flee to bitcoin.
in other words if there is any connection it is a reverse one meaning if the traditional markets dump, bitcoin should shoot up.

There should not be any correlation but unfortunately we have see trends where the bitcoin market has responded inline with the traditional market. But it should not have happened because when the traditional market goes down, bitcoin can be considered as a gateway for parking money. So ideally bitcoin market should have responded in a different way. But with billions of institutional money, we are moving towards a connected economy!

I think Gold or silver can be an alternative vehicle to park your money in case we face a global recession again. These metals will not be fully connected to the traditional market and these have been used as a tool for capital protection since ages. So if bitcoin becomes a fully connected investment with the traditional market, metals can be an alternative, at least to me!

Thanks to the Internet,  we have erased the difference between regions and people from various locations can connect to others easily. That is why our economy becomes international and integrated. As the result, bitcoin is set off to be connected to global finance which is orchestrated by people all around the world.

I have seen bitcoin bound with the prices of gold for many years although the signs are still blurred. But right now, it is no doubt that bitcoin both influence and is influenced by stocks, gold, bonds, metal and our current economic conditions. Remember this time last year. Bitcoin was struck by covid-19 and is reduced by 70% in just a month

The more institutional investors join, the more likely it'll be that a path between stocks and commodities will be chosen. I suppose institutional investors will use BTC as a replacement of physical gold, since it can be yours, under your own custody with a paper as a minimum requirement to hold it all - even billions.

I don't think there is any way to escape this. The closest thing is altcoins - but since they usually mostly follow BTC, anything BTC will be connected to directly affects alts as well and indirectly connects them to the stock market too.

Bitcoin is already connected. Our world is connected.
One event in China will affect USA stock market and interest rates in Europe.

Look at pandemia for example.

This is the Gold price chart. You can see that even gold dropped about 8% in corona virus crises


By the time, I read that investors were selling gold to buy stocks that were even cheaper, about 40% price drop.

So, when interest rates go up and bonds become more attractive, people will sell bitcoin to buy bonds. This is how it works in a globalized world.


Is there a place to hide? Well, you can't hide, but you can protect yourself: diversify your investments.

You should have some bonds, some stocks (I suggest ETFs, like IWDA), bitcoin and gold.

Diversifying is safer than buying only conservative assets. If you have those 4 assets, you are safer than most.
Your portfolio will have some volatility, but that's healthy. Don't panic sell in a crisis and you will be fine.

I think that the connection between traditional investment an investment in Bitcoin as an alternative asset by the big player will start to create a link between inflation, rates and the price of bitcoin. It is traditionally well established that stock drop when bond rates rise. Will that happen to bitcoin prices? Is there still a place to hide if bitcoin becomes fully connected?