[UPDATED] Bitcoin vs Gold vs The US Stock Market(US500)

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Quote from: LUCKMCFLY on October 06, 2020, 02:13:15 PM

I think that the correlation between gold and bitcoin is only in the short term, gold has had a slight recovery, it is good, since Donald Trump fell ill with Covid-19 and his wife, they all believed that the price of the markets was going to end very low, in fact the problem of Bitmex regarding the accusation of fraud for some affected that they believed that the price was going to fall, apparently it may be that most people are beginning to understand the great potential that the market has of Bitcoin, we may now see a market rally to around $ 11k or higher.

As you can see from the charts, the strongest correlation between bitcoin and the stock market. Gold walks with them, but sometimes it comes off completely and goes in the opposite direction. I wonder under what conditions bitcoin will become more independent and behave like gold and have the greatest correlation with it?

Fundamentals Of

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Quote from: atjiat on October 16, 2020, 09:26:42 AM

If the Peaceful state of affairs in the world begins to collapse, then the stock market will not resist. The main value will be bitcoin, gold, and also silver. And given the recent news from China, it is highly likely that a major war cannot be avoided. China's next Five-Year Plan aims to increase military power and keep troops on full alert. I believe that such steps are not taken in vain. And when people understand this, then cash will no longer have any value, including the dollar and the yuan.

A major war does not equate to a world war. Humans are hard-headed and could hardly learn a lesson but I think the world is not about to confront another world war. And if a war should come, I think the best form of money would be cash.

A war at this state of our technology means complete destruction. It does not only mean killing the other army or the enemies alone. It is gonna have a collateral damage that is far worse than the intended damage. We are at the nuclear age after all. That means the internet, the electricity, and things which are needed in relation to the use of cryptocurrency would be highly affected.

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If the Peaceful state of affairs in the world begins to collapse, then the stock market will not resist. The main value will be bitcoin, gold, and also silver. And given the recent news from China, it is highly likely that a major war cannot be avoided. China's next Five-Year Plan aims to increase military power and keep troops on full alert. I believe that such steps are not taken in vain. And when people understand this, then cash will no longer have any value, including the dollar and the yuan.

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Quote from: cryptoperkele on October 09, 2020, 05:38:46 PM

Well that's a good point, i was thinking that they could run out of cash fast while trying not to get margin called, and they could look to sell something that isn't as important to them.

Well yea I'd assume this is why Square only allocated a really really small amount(in contrast to their total mcap), so they wouldn't be forced to liquidate the bitcoin if the day comes that they'd need the extra cash. MicroStrategy on the other hand though, they definitely took a risky bet.

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Quote from: mk4 on October 09, 2020, 02:10:19 AM

Nope.

Most investors hold cash to have money ready to buy price crashes. It would make zero sense for them to hold bitcoin for this specific reason due to the simple fact that bitcoin has been mirroring the stock market for a while now, as proved by the chart on the main post.

Well that's a good point, i was thinking that they could run out of cash fast while trying not to get margin called, and they could look to sell something that isn't as important to them.

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Quote from: el kaka22 on October 07, 2020, 01:43:01 PM

For this example we can use pandemic and trump, pandemic made stocks go down but it also made bitcoin go down, pandemic was global and it hurt everyone so it is obviously easy to understand why both got affected, but trump is american president, that has got nothing to do with bitcoin.

I believe that the cause was pandemic, at that moment in March so they both went down for the same reason but they didn't went down because it was something we couldn't handle in both of them and not because one went down. I agree that there is a correlation, but I also disagree they are connected all together.

I just think that there are times when they go down together, there are times when they go up together and there are times when one goes up the other goes down. This means we do not know what will happen beforehand and that is why we can't predict the movements of one of them by looking at the other one. Finally if they are not connected but correlated, that means it doesn't matter to us at all because if we can't use that information, what is it good for?

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Quote from: el kaka22 on October 07, 2020, 01:43:01 PM

^ I doubt that connection between us market and bitcoin is that simple. I understand that there are times when us stock market goes down and so does bitcoin as well and so that is why many people think it is normal for bitcoin to go down when stocks are down but that is not the connection at all.

The connection between them is that sometimes there are reasons why stock markets go down and that same reason could cause bitcoin to go down, in that instance bitcoin is not going down because stocks went down they are both going down for the same reason.

I'm not saying correlation = causation. I'm not saying stocks dropping is the cause of BTC dropping when I point out the two asset classes are correlated.

I could speculate about causes. Maybe investors broadly view both stocks and BTC in terms of risk-on/risk-off cycles, so they naturally move together sometimes even though they are unrelated. Maybe BTC traders observed the correlation and began front running it, setting up bots to follow the stock market. Who knows? The cause doesn't really matter. It's more important to recognize the two markets are correlated. If one is trending strongly up, be careful trading short on the other. Etc.

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Quote from: cryptoperkele on October 08, 2020, 01:58:52 AM

One reason might be that some larger whales who own stocks, own quite a bit bitcoin as well for speculative reasons. This amount is nothing compared to their stock portfolio but is a still huge amount of bitcoins. When prices crash in stock market, they need dollars to protect their long positions in securities and sell their bitcoin in order to do so.

Nope.

Most investors hold cash to have money ready to buy price crashes. It would make zero sense for them to hold bitcoin for this specific reason due to the simple fact that bitcoin has been mirroring the stock market for a while now, as proved by the chart on the main post.

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Quote from: el kaka22 on October 06, 2020, 01:48:11 AM

I am pretty sure the reason why we weren't really affected all that much was the fact that nothing that should be affecting bitcoin ever happened. I understand that trump is sick but why do people think that it should be affecting bitcoin as well? Not like Satoshi is sick? It is not like Vitalik is sick? It is trump and trump has nothing to do with bitcoin at all.

So, why do people think bitcoin should have gone down?
---cut---

One reason might be that some larger whales who own stocks, own quite a bit bitcoin as well for speculative reasons. This amount is nothing compared to their stock portfolio but is a still huge amount of bitcoins. When prices crash in stock market, they need dollars to protect their long positions in securities and sell their bitcoin in order to do so.

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Quote from: el kaka22 on October 07, 2020, 01:43:01 PM

^ I doubt that connection between us market and bitcoin is that simple. I understand that there are times when us stock market goes down and so does bitcoin as well and so that is why many people think it is normal for bitcoin to go down when stocks are down but that is not the connection at all.

"There are times". Except that their price movements are pretty much mirrored, and this has been the case for months already; except that bitcoin's movements are just slightly exaggerated at times. Bitcoin and the stock market's correlation isn't even a subjective thing, it's a mere fact.

el kaka22

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^ I doubt that connection between us market and bitcoin is that simple. I understand that there are times when us stock market goes down and so does bitcoin as well and so that is why many people think it is normal for bitcoin to go down when stocks are down but that is not the connection at all.

The connection between them is that sometimes there are reasons why stock markets go down and that same reason could cause bitcoin to go down, in that instance bitcoin is not going down because stocks went down they are both going down for the same reason.

For this example we can use pandemic and trump, pandemic made stocks go down but it also made bitcoin go down, pandemic was global and it hurt everyone so it is obviously easy to understand why both got affected, but trump is american president, that has got nothing to do with bitcoin.

exstasie

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Quote from: el kaka22 on October 06, 2020, 01:48:11 AM

I understand that trump is sick but why do people think that it should be affecting bitcoin as well? Not like Satoshi is sick? It is not like Vitalik is sick? It is trump and trump has nothing to do with bitcoin at all.

So, why do people think bitcoin should have gone down?

Do you think Trump has nothing to do with the US stock market?

That's the connection. The US stock market is correlated to risk assets. That includes Bitcoin. So if Trump got really sick and died, and that caused a selloff in equities, there would also be a selloff in BTC. It's no surprise both BTC and all stock futures markets dumped together for a couple hours when the news first broke.

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He is getting out, or maybe he is already out as well, so we can't really assume that it is a very long term thing. Obviously there is talks about Trump being ons streoids, those are not just for people who do body building to look better, they are actually medicine and considering it helps you heal better and faster it makes sense to give some to him, even if the long term affects are bad, he was given for just two days and that's it, so I guess it could be true.

We do not have any proof at all, but if that is right this means when the affects run down and he no longer has any streoids in his system, he might get even worse, temporary fixes will never be solution for permanent problems, which I assume he did in order to get back on the campaign but I think he will get worse.

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I think that the correlation between gold and bitcoin is only in the short term, gold has had a slight recovery, it is good, since Donald Trump fell ill with Covid-19 and his wife, they all believed that the price of the markets was going to end very low, in fact the problem of Bitmex regarding the accusation of fraud for some affected that they believed that the price was going to fall, apparently it may be that most people are beginning to understand the great potential that the market has of Bitcoin, we may now see a market rally to around $ 11k or higher.

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Quote from: el kaka22 on October 06, 2020, 01:48:11 AM

I am pretty sure the reason why we weren't really affected all that much was the fact that nothing that should be affecting bitcoin ever happened. I understand that trump is sick but why do people think that it should be affecting bitcoin as well? Not like Satoshi is sick? It is not like Vitalik is sick? It is trump and trump has nothing to do with bitcoin at all.

So, why do people think bitcoin should have gone down? I understand that american market may have gotten affected but that is because it is their own president that got sick so it makes sense that American market gets affected by American president, but bitcoin is not American, it is not European neither, it doesn't belong to any place, it belongs to everyone in the entire world so we all need to be affected.

What are you even saying? No one is here is arguing that "bitcoin should have gone down". It's just the fact that bitcoin actually did went down with the stock market; even if we like it or not, and even if it makes sense or not. The simple fact is that, it simply did.

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Quote from: mk4 on October 04, 2020, 10:51:54 PM

Quote from: Febo on October 04, 2020, 11:21:23 AM

This. Loss was big for stocks but just a regular day for Bitcoin.

Yes I agree with OPs concern that Bitcoin followed stocks and not Gold. But if we look from dothebeats perspective Bitcoin price stayed pretty unaffected. It was just a normal day. Gold went up, stocks down. Bitcoin stayed same.

It's not that bitcoin was necessarily unaffected, it's just that we bitcoiners are far more accustomed to such price volatility. But it doesn't take out the fact that the price moved in a certain manner.

In the first place, this topic isn't about the price drop(because who cares). It's mainly about the price correlation vs gold and the S&P500.

I can also address that directly it seems that bitcoin is not affected but if everything moves in a downward position of course there will be an impact and I agree that bitcoiner is more used to experiencing this compared to other products. In a situation like this, however, we can be sure that all will have an impact, no matter what, it's just how to reveal the impact that will differentiate.

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I am pretty sure the reason why we weren't really affected all that much was the fact that nothing that should be affecting bitcoin ever happened. I understand that trump is sick but why do people think that it should be affecting bitcoin as well? Not like Satoshi is sick? It is not like Vitalik is sick? It is trump and trump has nothing to do with bitcoin at all.

So, why do people think bitcoin should have gone down? I understand that american market may have gotten affected but that is because it is their own president that got sick so it makes sense that American market gets affected by American president, but bitcoin is not American, it is not European neither, it doesn't belong to any place, it belongs to everyone in the entire world so we all need to be affected.

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Quote from: Febo on October 04, 2020, 11:21:23 AM

This. Loss was big for stocks but just a regular day for Bitcoin.

Yes I agree with OPs concern that Bitcoin followed stocks and not Gold. But if we look from dothebeats perspective Bitcoin price stayed pretty unaffected. It was just a normal day. Gold went up, stocks down. Bitcoin stayed same.

It's not that bitcoin was necessarily unaffected, it's just that we bitcoiners are far more accustomed to such price volatility. But it doesn't take out the fact that the price moved in a certain manner.

In the first place, this topic isn't about the price drop(because who cares). It's mainly about the price correlation vs gold and the S&P500.

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Quote from: dothebeats on October 02, 2020, 08:19:40 AM

For the stock markets it might seem to be a huge event, but for bitcoin it is not.

This. Loss was big for stocks but just a regular day for Bitcoin.

Yes I agree with OPs concern that Bitcoin followed stocks and not Gold. But if we look from dothebeats perspective Bitcoin price stayed pretty unaffected. It was just a normal day. Gold went up, stocks down. Bitcoin stayed same.

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Just having a fixed supply doesn't guarantee being a hedge. Bitcoin is still an extremely risky and speculative investment, it doesn't even have some predictable fundamentals that you can use to calculate its value, and it's not enough that a small group of people believes that it's digital gold, because the rest of the population doesn't, and they won't be using it as a hedge, so it's natural for the speculators to dump it when there's uncertainty.

Topic: [UPDATED] Bitcoin vs Gold vs The US Stock Market(US500) (Read 531 times)