Topic: When the US stock market goes down Bitcoin goes down (Read 1006 times)

This was much better than the trash Cointelegraph usually produces. Looks like there are still plenty of skeptics regarding the April-July bull run:




It's true that retail investors have played a significant role in the recent bull run. That's worrisome. The combination of so many retail bulls and horrible underlying economic fundamentals is straight up scary. I'm worried institutions are now selling into retail demand and positioning themselves to squeeze longs.

Should be an interesting couple months, that's for sure......

The US stock market isn't that big influence on the crypto market but of course, it somehow will affect the movement as well. We can see that it is a coincidence, not really for sure because what happens to the local stock market also drag the prices when it down. Things to see that the global market situation will be a huge factor that could affect the crypto market and many times it happens just like the crisis we have now.

We can bring Bitcoin prices to the high level if the economic situation will stay like this.
https://cointelegraph.com/news/3-reasons-why-bitcoin-price-could-crash-if-us-stock-market-collapses

I hope this could not create another drama but much better to be aware and prepared if ever this will happen.

It is obvious when an investor invest on both bitcoins and S&P500 then he may react to fundamentals in same way and may take similar decisions when something like covid19 outbreak happens or will invest more when he gets some bonus from this regular job. I guess correlation of bitcoin markets with US stock markets simply depicts us about the influence of both the markets by same set of investors and traders. I guess in near future, we might be having more correlated movements in bitcoin markets against US stocks as bitcoin markets already started attracting more traders and investors from there.

I guess bitcoin market is getting expanded due to its proven potential over the decade of time . When more people from wall street start admiring about the basic economic characters of bitcoins then we will have more stock based people into bitcoin ecosystem which will definitely lead to make market to react in same directions for any impacting news.

Trading is about the dollar and leverage thats why it all appears to be related, in extremes even gold because gold can be cashed and used to pay off leverage and margin calls.    So if we shock event, volatility, it usually relates to contraction and pullbacks, margin being paid.  I dont think BTC is related to SP500 especially outside of that dynamic but every part of the economy will appear to contract or expand.
   A good clue to this question would be to examine the volatility index and relate to prices of various assets also gold itself is considered a hedge against volatility as prices become less reliable day to day gold is more useful as a known quantifiable value over hundreds of years.
https://finance.yahoo.com/quote/VXX?p=VXX&.tsrc=fin-srch

I have seen many articles where there is a great correlation between the S & P500 and Bitcoin, and of course, when there is a fundamental one like the Covid-19 it affects the markets, even gold suffered a drop, and when the correlation is revised in the short term if it exists, everything changes when analyzed in the long term.

But to take into account, the Bitcoin market recovered much faster than the stock markets worldwide, hence it is concluded that it is not totally correlated, sometimes it can be taken as a mere coincidence that the movements depend on each other, but This is not really the case even though the global economy is one, when taking into account Bitcoin's deflationary economy it departs completely from the traditional one.

I just thinking that many countries out there which already categorizes bitcoin as a comodity so as they will make the same strategy like they use a strategy in stock market. Yeah I know the event, most of economic instrument were decreasing at that time. There is just one instrument that still consistent even its price is tend to increase namely gold. Many people think that gold is a safe heaven asset it means when many people believe that the stock market, crypto and etc will decrease because there is something bad happen they will their asset into gold and holding until the situation running well.

Bitcoin market price is just a pair of BTC/USD or BTC/USDT it is just they are pair so there is a change in the market price of the bitcoin but at the end of the day, there are no real changes in terms of the bitcoin it is just a still a bitcoin when you buy one (1) BTC at the end of the day even the market price of the bitcoin falls down still you have one(1) BTC. Many people are trying to say that the market price of the bitcoin falls down but this is not real.


Some of the people today are making an investment with the use of bitcoin because this is the new safe haven right now because the economy of the different countries and one of the best ways to make an income is to make an investment with the use of the bitcoin.

Some investors may get triggered to sell their crypto assets whenever they see downfall in the stocks but it is not really meant to happen since crypto assets are way better than stock market investment so getting signals from stocks makes them to lose their money on most of the occasions.

In my opinion it's just a coincidence, because if we study the movement of the stock market with bitcoin is much different. Maybe that happened
in March 2020 due to the Corona virus Outbreak that caused investors to panic and make all investments go down, not just the stock market
and bitcoin only. Even gold and real estate investment when it came down too. What happened in June is also the same.

When Dollar index is rising it means the exchange rates of most currencies are then buying less dollars per their own national units.    If countries, companies or people owe dollar, have debt or leveraged accounts in that unit then they become dramatically worse off at that point as both market and positions can move against them.     BTC as it trades and is easily exchangeable in dollars is a possible source of dollars for those who owe this debt, hence even if BTC had previously been wanted and had no problem within its own sector it will still become under pressure as a funding source of dollars.    Its not as true within the USA where of course dollar is the only currency commonly used but most countries around the world also have dollar as their reserve asset and source of liquidity when trading especially globally, so its a receding tide for economies outside the normal circulation of dollar liquidity.
   We have foreign nationals investing in US stock market and we have global usage of BTC also, you can have any currency linked to an asset price in theory but the biggest markets are for dollar pricing at present.   Hence I think the two are linked in this way, its also possible for a foreign company to owe dollars in taxes and tariffs yet have no natural source, if dollar rises and perhaps they receive less orders also their profits are impacted twice over.
 I think the explanation for carry trade in investing dictionary could help explain some dynamics better https://www.investopedia.com/terms/c/currencycarrytrade.asp

This could be the case in the future if investors begin to see bitcoin as a store of value but it seems we are not there yet, investors see bitcoin as a highly speculative asset and as long as this is the case then whenever the stock market goes down significantly we may see an eventual movement in the same direction of this market, many do not like this but to me this is a transitional phase of bitcoin and there is nothing to worry as long as the development of bitcoin continues and fiat keeps losing value.

We thought for a long time that Bitcoin is not correlated to the classic stock market - that it is an asymmetric asset, but more and more we see, that it is really correlated. Simply, when investors are afraid, they do not invest, but when they see an opportunity they buy. And it doesn´t matter what asset it is at the end if it is crypto, oil, precious metals, or stocks. It is either a rising trend or a declining trend.

This isn't really true, it only has a small impact on the cryptocurrency market. Why is bitcoin price in 2017 so high? Was the US stock market also similar at that time? And then how does bitcoin fall free?

Bitcoin is not correlated with the US stock market, you can see the difference, yes bitcoin dropped at the price you mentioned but it rises back again. In fact, it reached $10K days before the halving if I am not mistaken and now bitcoin is already trading above $9k.

You can see that there's a big difference, the US stocks continues to struggle while bitcoin is quite stable already.

Maybe the initial effect was not good for bitcoin due to panic, but then it slowly recovers and we are seeing it's good price now.

Not quite true! Every market is affected by the global economy! There's no particular national economy that can affect all of the markets even the U.S or China. Also, there's no statistic that proves the U.S has the largest number of crypto-traders not to mention a lot of traders in other countries registered as U.S citizens (fake info). Therefore, it's not accurate to say that all market depends on the U.S economy.

Dollar is a funding currency, its one of the most liquid largest and cheapest market traded currencies in the world.    What will happen is money is borrowed in dollars to buy various goods, even including BTC.   When sentiment turns and market pulls back the dollars that sold come back to repay the debt and settle the trade hopefully for a profit.    Theres usually a rush for that to happen in any proper sell because so much money is borrowed it causes a great wave to close out fast and first not to be the last to spot the tide change and get wet.
   The way this is most obvious is by difference in currency interest rates, if say I borrow Australian dollars and they had a 5% interest then I must pay that on top of my fees.   To go borrow AUD and go long USD would pay poorly unless the move to loss of value for AUD was greater, quite certain to the trader.  Its part of why a central bank raises rates to stop their currency falling too low, raising import costs.    The reverse however is happening, USD is very cheap to take on account and spend and then I simply go deposit this in AUD and gain my 5% a year so Im very happy so long as the sun shines and we expand or believe Australia will expand.   Same for BTC, it rushes up and people sell dollar to come to crypto and vice versa they'll run like the wind to close and sell out.
   Similarly stocks, when markets fall alot of the effect is hot money borrowed from easy money regimes and Dollar is the biggest of all.  Thats why we get correlation, its harder to tell which sector performance can stick and grow its revenue, business.     BTC has no yield but its also hard to mine, its not a funding currency for other ventures really.

It depends which stocks you look at. The NASDAQ 100 index recovered even closer to its yearly highs than BTC did, 0.3% vs. 0.9%. Some stock sectors are obviously recovering much better than others. Tech, biotech, e-commerce, and a few others have made huge gains while others are still in the dumps. I think we should take a more holistic approach when making these comparisons.


They've been looking almost the same for 4 months now. The only real difference is the magnitude of volatility.

Bitcoin was looking good after the first Covid dip because it recovered much better than stocks. There were even opinions that it's going to be like gold and rise when stocks are falling.

The second dip is looking much worse with Bitcoin and S&P 500 looking almost the same.

It's still better to hold Bitcoin than stocks though because it dips and recovers faster but I'll admit that I was expecting a slightly better performance.

I think right now every market runs according to US market.One reason is it is the largest market financially with companies registered globally and people invest in them from all around the world.Secondly US has the largest number of crypto traders and if there financial condition is not good than they will withdraw or sell their investment.

If the stock market is neutral to bullish, the correlation tends to fall. When the stock market is bearish the correlation increases; they fall together and recover together.

It's a very similar dynamic to BTC vs. altcoins. When BTCUSD is neutral to bullish (and especially sideways ranging) altcoins are free to pump independently of it. On the other hand when BTCUSD is in a bear market, altcoins are undoubtedly in a bear market too.

All of this suggests to me that the correlation is derived from the fact that stocks, BTC, and altcoins are all viewed by investors as risk assets to differing degrees.