Bitcoin Forum

last year (mostly near the end of the year) a common saying started to show up when people kept saying bitcoin is falling because the stock market is falling (an example (https://bitcointalk.org/index.php?topic=5070822.0)) and although that was probably the first time bitcoin's drop coincided with stock market crash, this particular speculation became popular for some reason!

now the stock market is crashing due to trade war between the United States and China and meanwhile bitcoin has been rising consistently setting a new high each time it rises.

this topic is meant as a reminder that bitcoin market is a completely independent market taking effects from lots of things most of which are specific to bitcoin and usually concern adoption of it.

Generally, for me, people already awake with the fact that bitcoin and stockmarket runs a different system and algorithm. That they are a to conflict things. It is really simple for the two to compare. The bitcoin's value is based in the mined bitcoin and the numbers of new comers. And the stock market's values in the market are based on each and every company listed in the said stock market.

I can tell that the people know this difference in general as I am very confident that almost all of the people in the cryptocurrency industry has a great mind to know about this.

This tweet from @krugermacro shows how little correlations there is between stock and bitcoins.

Stocks crashing. Bitcoin soaring. There goes another narrative.

https://pbs.twimg.com/media/D6di9ZgWkAYMuz8.png

Last year's similarity between the crypto and stock market price patterns was just a coincidence.
Many people believed that the stock and crypto markets were somehow connected,because they wanted to find a valid reason explaining why the bitcoin price crashed.
Now we all know that the reason behind crypto price crash wasn't the stock market crash.

Nothing can control BTC, nothing will be able to compete with BTC

And @some time everybody is gonna will to own some BTC.....

People are just super desperate to find an explanation for every single Bitcoin price change, they just can't get over the fact that Bitcoin is volatile, and "Bitcoin follows stocks" is not the worst theory I've heard, people here seriously believe that Bitcoin crashes are caused by governments and banks trying to kill it while they can. Maybe the last years simultaneous drop was merely a coincidence, or maybe there was indeed some connection, but generally there's no clear and proven connection between Bitcoin and stock market, so of course people shouldn't believe in it just because someone suggested it.

There are a lot of times in which stock market movements coincided with bitcoin's, though that isn't sufficient to use as evidence since on most significant events of contemporary times, say trade wars between China - US and Iran - US, bitcoin continuously rose while some stocks fell down and the Dow painted red everywhere. I would believe that the two are related if on major events, bitcoin and stock market movements are extremely similar, but so far that has been defied and we are yet to see bitcoin ultimately following the shadow of the stock markets.

People who are already veterans with bitcoin and cryptocurrency are aware that there is no connection or correlation whatsoever between bitcoin and stocks or even with other investment vehicles like gold, forex, derivatives, etc. Bitcoin and the rest of the gang is a standalone a class of its own and if ever there can be times when they move altogether those are just coincidences not worthy of studying. Right now, stocks are not doing well as the market is afraid of the results with the trade war between the powerful China (as well as with the influential EU) and the withering (though surviving for now) United States. The problems with stocks is one factor why the attention is focused on bitcoin right now.

I've only heard people say that will very flimsy reasoning. Like they'll point to a particular day or week when both markets happen to be going up or down and say look they're correlated. Nobody should take these people seriously.

Thats conjecture, the two are responding to the same effect not linked directly as they describe completely separate things.    Most likely stocks fell in some response to perceptions on Dollar strength and interest rate rises previously and expected in future.   
Some apprehension about recession was also possible for stocks at least.    Bitcoin is also subject to leveraged money I think, this was a large part of the 2017 rise and greater exposure to consumer credit.   With rate rises comes tightening of loose money or hot money which is pushed between assets rising, often this can happen in conjunction.   I dont think BTC is leveraged but its a possible mistake by speculators at times.

Overall BTC is more diversifed then stocks I think due it to being quoted globally in a variety of currencies and exchanges not just one large city and one currency

I have been in both bitcoin and stocks market and I have over 13 years of experience in stocks trading and I have never see the same pattern in both markets except in the imagination of few. Bitcoin is moving up seriously now why the stock and forex market are losing and that is a sign that both has different settings.

I am familiar in both platforms, Maybe there are people that are thinking that it is the same and have some connection but that isn't really the point, Because of the different movement and platform stock exchange and Blockchain trading has to  offer, But they are both pretty have the same concept, And I have seen that the forex and other platforms of stock exchange does have bitcoin on their trading, I think that is given because naturally, bitcoin is the main source of all cryptocurrency.

The only similarity I see with bitcoin and stock is that they can be analyzed by technical indicators on the platform as far as trading is concern but coming to news, manipulations and emotional sentiments, they are far apart from each other.

Overall i dont think so. Bitcoin gains value out of trust and being a open book. It is a wild beast finding its way and does not follow any market.

Going with Op question, yes people are thinking bitcoin is following up on stock. I think this is misleading because bitcoin is far different and volatile. The most people with this ideology is usually newbies.

What major factor that I think that grows bitcoin is acceptance or adoption. The more people make order to buy, price keeps appreciating in my own knowledge.

If you look at 1 min chart you will always find discrepancies. But zoom out a little... I'll quote exstasie post from similar topic because he prepared nice charts for that.



As you can see there is very long term correlation that can't be denied by last few days movement.

Uh, you call this a stock market crash? :D

For some context, here's a screenshot of the S&P 500 index:

https://i.imgur.com/HZpVeys.png

Interesting coincidence seen above: both the stock market and the Bitcoin market bottomed out in mid-December 2018. Interesting, that! ;)

Stocks have been in a bull market during Bitcoin's entire existence. There was fear of a crash last year that never materialized; in fact the stock market saw new ATHs just last month. The Bitcoin market has never experienced a real stock market crash or even a recession. So the people assuming these things would have zero effect on the Bitcoin market are making that assumption based on a crystal ball and some questionable logic, nothing more.

That's right. In fact, the whales very often can use the news background in order to give a big color to certain events and use this to influence supply and demand, however it often happens that no news influences what happens to Bitcoin, from which you can the conclusion is that Bitcoin is not so depends on the political situation.

I just believed that stock market investors got diverted with bitcoin, once the price increase very fast. But for now I think it's not the green market that counts behind because most day traders cannot control their hands, and will dump very fast due to price surges. Just hope for the whales to subside when things remained stable so far, and yet probable price fluctuations was only a part of uprising further development .

Since cryptocurrency is more like a currency than stocks, people see differently in between these two. Crypto is more influenced by governments, monetary system etc. Rather than a company's status and growth. I have thought also of this at first but as long as i get exposed to crypto, i understand it much better.

I see a better market on cryptocurrency than stocks, its more active and alive though forex is a different trade market. Bitcoin takes a different path, a better path while stock market are just roaming around the cycle. Well, i have both but in terms of my activity, its more on cryptomarket.

even if there is not a direct causal relationship between the two---and tbh i think there may be---anyone who has studied markets for years knows there is a strong element of mass psychology involved in global markets.

one way this is noticeable in conventional markets is the risk-on risk-off cycle. (https://www.investopedia.com/terms/r/risk-on-risk-off.asp) during risk-off years, we see a general contraction in the financial markets and value flow out of all high-risk assets into cash, bonds, etc. traders who trade multiple asset classes have also probably noticed that seemingly unrelated markets often reverse all at the same time. this probably has to do with mass psychology. when traders and algos see one risky/speculative asset rising off a bottom, they take it as a sign to buy another because traders are always seeking high reward opportunities. in this manner, i think bitcoin benefits from a bull market in equities.

i think people make a fundamental mistake when they assume a stock market crash = people selling stocks to buy bitcoins. like every other stock crash, they're probably going to hold cash instead.

in order to compare two different charts you need to compare them within the same time frame not different ones. so in this case if you correct the time frames in both images, you will get something like this (S&P chart is on top and bitcoin chart is at the bottom):

https://i.imgur.com/dkYlhxm.jpg

as you can see the trends do not match at all except some rare coincidental cases. i only highlighted two obvious cases here.

There isn't enough data yet to find the correlation in my opinion.

I remember in 2018 when the stock market took a nasty crash and BTC also had a similiar crash and its the only latest event I can find besides the last couple of weeks where due to the trade wars the stocks are tanking (a little) while BTC is rallying.

Just like the chart that was posted above. When BTC broke support in November, the stock market did nothing. And when the stock market was rebounding from the low of 2018, BTC did nothing for months.

Hence you can't really see the correlation and certainly trade off it.

I did not even hear the talk that the stock and cryptocurrency markets are interconnected with each other. Bitcoin was created as an alternative means of payment, which would not have been dependent on the usual currency. Cryptocurrency is not associated with the economy of the state, in contrast to the usual currency. Therefore, it does not depend on the rate of the usual currency. This is both a disadvantage and advantage of cryptocurrency.

My point was not to compare those 2 charts looking at small bottoms and tops. My point was to show that on large scale both are strong bull markets in one massive 10 years-old uptrend. When S&P will crash like in 2008 or 2000 (-50%) and bitcoin will survive that without significant drop we may say that it is not fallowing stock market.


https://i.imgur.com/A0aADMs.png

It would be absurd if people still bought into that narrative.

If anything, bitcoin and the traditional stock market would be somewhat inversely correlated given that one sector has a heavy influence from the traditional, fiat economy, and the other does not at all.

Perhaps in the short run, we'll see some periods of correlation by either coincidence alone, or because of factors such as interest rates, macro-sentiments, etc. But in the long run, there is really no intrinsic connection why the two are correlated whatsoever.

The macro trends match completely. You're just cherry picking and missing the forest for the trees.


The last decade in equities has more to do with speculative mania and a high-risk investment atmosphere than the economy. You think massively overhyped IPOs and bubbling tech companies with zero profits are normal now because of the economy? No, it's because the financial markets have become hyper speculative.

One might say, but stock market is heavily pumped with easy credit and depreciating fiat money. But you know what? So is Bitcoin.

Why would you say Bitcoin isn't influenced by the economy? Investors (whether stocks, commodities, real estate, Bitcoin, etc.) are all part of the same economy. In an economic crash, where investors are unwinding speculative positions for cash, retail investors are losing their jobs, and everyone is making less money, why would everything fall except Bitcoin? When everyone is broke and companies are going bankrupt, where is all this money coming from to drive up Bitcoin prices?

This is actually a very good question. There should be some correlation between Bitcoin and the stock markets, but this correlation seems to happen in a strange and indirect way, not like a direct action-reaction mechanism.

The only correlation is investing activity, so all the traders are concentrate both investment. Stock market investment is unpredictable so every day someone earn good profit but Bitcoin and altcoin investment is kind of single way so few months only it will make good profit, I think right now Bitcoin is the best investment.

Since the first time I knew bitcoin, I never think that bitcoin correlates with stock markets because I think bitcoin has to stand alone from stock and it moves differently than the stock itself. Maybe I am wrong because I don't know anything about stock markets and I never try to trade or join in any stock market.

I think it is normal if, in the stock market, we see the market is crash, and that give impact to the cryptocurrency market, and the impact is the crypto market has grown than before. It seems people want to try another way to cover their loss, and finally, they find that the cryptocurrency market can be their solution to make money again. So many of them were join in the crypto market and leave the stock market, and they don't think that they will come back to the stock market again in the future.

Both Bitcoin crash and stock market crash have a reason.  None of them is a reason, but they both need a reason. So you cant say that Bitcoin crashed because of stock market or opposite you cant say that stock market crashed because of Bitcoin. So at end of last year there was a reason that crashed both stock market and bitcoin together. Now it looks there is a reason that crashed stock market and helps Bitcoin.  It is obvious reason is not the same.

No I don’t think that Bitcoin is following stock markets lead, as both are completely opposite and have no correlation with each other. Bitcoin had risen to an all time high in the end of 2017, I don’t remember stock markets closing at all time high or crashing badly because of bitcoin prices rising. I have yet to come across charts that can prove that bitcoin is following the stock market, if anyone has those charts do share here.

It's more nuanced than Bitcoin following the stock market. That's not what is really happening.

My contention is Bitcoin is benefiting from this bullish era of heightened risk-taking and speculation in the financial markets, and the easy credit that's helping to produce it. I think when the trend finally flips and we finally do experience a significant contraction in the markets (and this could still be several years out), money will flow out of everything just like it always does in these situations. That applies to gold, Bitcoin, whatever. There is no such thing as the perfect hedge when every aspect of the economy is being downsized. That's what happens in a contraction/recession.

then your charts were posted here out of context because here i am talking about the statements that people were making recently about the "short term" following the stock market. for example they were saying the week(s) that stock market crashed and bitcoin price crashed was an indication that bitcoin is following stock market's every move which is clearly not the case.

as for long term what you said is an interesting theory but it were true then it is only one of the reasons. the main reason for bitcoin rise in my opinion is its growth and adoption. stock market has been around forever while bitcoin is still new so there isn't actually as much "new money" going in it as it is bitcoin. also bitcoin is global while stock market is not!