Bitcoin Forum

Hi everyone,

I have been reading a lot about correlation between stock market and crypto. As we have seen in recent months, when the stock market crashes, BTC follows.

BTC seems like have bottomed after more than 85% crash from $20,000 and, comparing with past bubbles like the previous one when the price topped at $1200, everyone think that BTC will have another similar bubble. But that happened in one of the longest bull cycles in stock market. This time, the potential run for crypto would have to happen in the middle of very probable bear market for stocks and nobody knows how BTC will be affected by it.

Some think BTC will raise because people will take it as Gold and as a reserve of value. Other think that it will fall as well because of the panic selling and people only wanting to have cash in hand...

What's your opinion about this?

I believe it could be a huge obstacle in the run to $100,000 in this new potential bubble...

Thanks

It will be interesting to see for sure.
On one hand we can guess based on gold's performance back then - which was absolutely nothing special.
On the other - it would take significantly less fiat money to substantially bump BTC.
Definitely holding crypto until it happens, even if BTC is a negligible portion of my portfolio.

Theres no correlation between crypto and stock market.The thing you do look at that both crashes is just pure coincidence and has nothing to do for them to be connected.
We can presume that funds on stocks might go to crypto yet its plausible but there are not news nor rumors that it would happen.

When wealth is threatened, people generally make reactionary and unpredictable moves.  If anyone here could tell you with any certainty how it would affect Bitcoin, they probably wouldn't, because it might impact the profit they could potentially make by reading the market correctly.  Just place your bets and hope for the best.  

This is very true such that "panic selling" is one of the biggest problems when the market is down.
People tend to do the same thing with crypto and freak out rather then just turn off your computer and live another day.
Better to be in this for the long-term reward then just the sudden wealth mentality.

I think that if stock market truly crashes (50-60%), then btc would crash as well.
It would probably recover first, though.

Here is a market crash scenario that is currently my favorite:
https://www.tradingview.com/chart/SPX500/aTlHFwTp-2019-The-year-of-the-Benner/

Note that he posted it on Dec 8 and predicted the bounce from mid Dec to today very nicely.

i honestly have not seen any relation between the two so far in the past years. and that mainly is because bitcoin is NOT connected to any other market and has always been a separate thing and not to forget "global" not limited to one country only.

the only thing that lately has led people to say "if stock market crashes bitcoin follows" is the recent drops in stock market that coincided with bitcoin drop but they are all missing the fact that bitcoin was already on a downtrend and it would have happened anyways.

if anything bitcoin should rise up if stock market crashes, exactly because as i said it is  a completely separate market and when one market is crashing investors always look for alternative investments to save their money. bitcoin may not be the best option (because of its high risk) but it certainly is an option.

People have been assuming the stock market is going to crash since 2010. Lately all over the social media targetted towards investors and on CNBC they are saying that some recession is coming soon due to the negative yield.

Let me tell you one thing, if it was that easy to prove when a recession will start then my Grandmother would be trading some stock puts options.

Everyone is trying to catch a stock market crash and shorting the top which is no different than the people buying BTC at $6000 expecting to catch the bottom. If a stock market crash, it will come when you least expect it.

Although a market crash is to be expected - because of market cycles, because many things go wrong.., this is 100% correct:


How Bitcoin will react depends on the timing. Right now Bitcoin market looks weak and there may be quite a blow.
Normally it should be 0 effect on long time. Maybe a bit of rise overall.
The history is always the same, no matter what's the trigger: The ones with vision will buy and make the price rise. Others will sell because they need the money. The price rise will attract speculators and FOMO newbies. The ones who know the market will, as usual, sell. Then the rest will, again, try to repair the damage.

Economic devastation could arise and will pull down the economy of a particular country, and fiat economy will decline which caused more trading to decline each and every assets. Many stock holders will become panic, once there's crash happening that's why stocks exchange has to be regulated and maintained by bigger investors. Also to add up here, some investors will consider crashes as an opportunity for them invest while every particular stocks became cheaper to buy.

If the market crashes, we will resort to cryptocurrency to protect our cash. I think you are right when you said that we will treat bitcoin as gold when the market crashes.

Bitcoin was born when the market collapsed in the 2008 recession. And most of us learned from that already. So if some signs of market collapse appear, we already know what we will do.

Short term, it is possible. I don't think there is a particularly strong correlation, though the entry of institutional investors into the market could make this somewhat different in the future as they may hold positions in both stocks and bitcoins.

But long run, especially when considering bitcoin's internal market cycles, I wouldn't take into what the stock market is doing as something that bitcoin will mirror/inversely follow. It's just two different things. You're comparing a currency, which has no central entity, to equity of businesses whose primary goal is profit maximisation.

Correlation doesn't mean causation. It's probable after a certain period of time that you'll see correlation between any markets, and that doesn't always link them together somehow.

There are 2 scenarios.
1- during market crash investors very often move their investment from high risk to low risk (stocks to gold). In that scenario bitcoin will drop due to its high risk asset.
2- bitcoin was made during market crash for all of those pissed off at the present monetary system. Perhaps during next market crash their feeling will be renewed and will see pump.

We need to remember that we are already dumped. There is not much space for further price falling due to lack of weak hands. Last news about delisting bitcoin futures from CBOE did not move the price.


I would not call bitcoin gold yet.

If there is a correlation it will be between the devaluation(inflation) of fiat and the deflation of Bitcoin.
And correlation is not proof....  ;)

Next you will be correlating sunspots with the temperature of your pasta....

I've been now comparing charts of BTC with Dow Jones, and the better correlation I see is on late 2018 when the Dow lost 20% that was when BTC lost support at $6xxx and fell to $3xxx. But if you look closely, Dow started to plunge in late August and BTC was not affected until mid November. I think that the fall to 3k in BTC was going to happen yes or yes, independent of stock market crash.

I have checked also the Dow correction in 2015 and it didn't have any impact on BTC, that hold the bottom at $250.

In fact, none of these have been big crashes of the stock market, just corrections, but checking them, I'm not sure that they both are correlated as many people think...

Regards

People didn't pay attention to CBOE halting their Bitcoin futures due to their poor volumes. Doing $4-$5 million a day in volume is well below what a trashy exchange such as Yobit generates.

I strongly believe that right now most of the weak hands are out already. What we are left with are those who are still in doubt but firmly hold just because they think that's the right thing to do because people say so.

It may require one more flash dump to make even these people unload their coins to get rid of what is left in latent selling pressure. The price re-testing its December low will very likely do it.

I don't think this statement is necessarily true--the stock market hasn't crashed recently.  It's had a correction, yes, but it has not dropped nearly as much as bitcoin has from its all-time high.  If the stock market lost 90% of its value in less than a year and didn't rebound, it would be front page news all over the world.

The Dow Jones Industrial average is still above 25k (had to check on that), so the little drop it saw over the last month or so wasn't even that significant--I don't even know if you could even call it a correction.  But I do think that if we had some sort of crisis that caused stock markets around the world to tank, bitcoin would likely drop along with them.  Usually when markets sink, it's because the economy is in trouble.  When that happens, investors tend to flee to safe-haven assets like gold & silver.  Bitcoin definitely is NOT a safe-haven, so my guess is that traders would sell off bitcoin just as quickly as they would their stocks. 

Yet I stick with my assertion that such a correlation does not have to be true.  Bitcoin obviously dropped a hell of a lot on its own, and thus it isn't necessarily tied to the stock market's performance.

If the stock market crashes, bitcoin will go to Jupiter.

The money need to go somewhere, and investors would hedge in BTC.

It would be an interesting metric if we knew what percentage of stock market investors also held BTC.  

My assumption would be that for those who don't already hold BTC, a sudden stock market crash is unlikely to make them take a punt on something they aren't already familiar with.  As others have mentioned, precious metals would be a more likely route for them.  But those that do hold BTC already may be more inclined to move a greater proportion of their wealth into Bitcoin if the stock market began trending downwards.

Actually i am not see correlation about stock market and crypto. Because crypto stand by itself. But maybe if people, a lot of people loss much in stock market because of crashed, maybe they can start to look at crypto or maybe not believe trading online anymore.

I agree with you. I only think that average Lambo guy don't know that. He thinks that ETF and BAKKT will safe bitcoin and seeing delisting futures should go and dump his coins. And we didn't see that. That means that there are less weak hands on asset.

No we definitely have not seen that.

Anytime I've seen people claim that they're like: "look the stock market went down today and bitcoin went down too, they are totally correlated!!" And then like two days later one will go up while the other goes down or doesn't move. One day going down at the same time does not make them correlated. Cherry picking coincidences does not equal correlation.

So far we have not seen any correlation between the two markets so it is impossible to tell what would happen to Bitcoin's price when the stock market starts going down, which looks likely in the next two years.



Three possible scenarios in order of how likely I think they are:

1. Bitcoin may just continue to exhibit no correlation to the traditional markets as it has done throughout its lifetime to the present.

2. People could flee stocks which are at the top of the market and go into Bitcoin since its at the bottom of the market, not to mention since it is a capped currency, with over the long term exploding adoption. That would be the sensible choice.

3. People might just flee into cash away from any investments, especially one they view as high risk like bitcoin.



The reason I rank them in that order is because you have to realize that bitcoin is MUCH smaller than the stock market in terms of participation. Most people who are in the stock market are not in Bitcoin, especially now after the crash. Most people in stocks have never bought bitcoin and likely a very sizeable amount of people in bitcoin aren't in the stock market to any reasonable degree (20-something year olds - studies have shown many young people today would rather buy bitcoin than stocks, so a lot of the people buying bitcoin probably have no stocks or very little) and many of the people who are in both got out of bitcoin over the last year during the crash. Meaning that people who are dropping stock are not gonna be dropping Bitcoin, because they don't have bitcoin. This alone makes #1 and #2 more likely and #3 unlikely. Meanwhile, because of this probably some of those people who are dropping stocks and aren't in bitcoin will pick up bitcoin, most of them won't, but some of them will, which makes #2 more likely. It's possible though that the people who have both and drop both balances out the people who only have stocks and drop them and pick up bitcoin to grow their money while stocks are tanking, in which case #1 would happen and bitcoin would overall just not really be affected by a stock crash.

I don't think bitcoin is large enough or accepted enough yet to have a gold-like "hedge against the economy" boom, so I think #2 will be limited as I don't see suddenly tens of millions of people realizing they should put their sold stock money into Bitcoin which is solid money like gold, maybe in another 10 years from now on the next stock crash but I don't think enough people believe in bitcoin now for that to happen. Which leaves #1 as the most likely - bitcoin will for the most part just continue its own market cycle and will be in a bull market the next couple years booming again in 2021 or 2022.

No matter what happens you don't need to worry. One thing assured is that in a few years bitcoin will be many times more valuable than it is now, whether or not a stock crash affects the bitcoin market cycle or not.

I don't quite see the actual correlation between the stock market and the bitcoin market although I always believed that wealth always has to go somewhere. so it'll be either precious metals or crypto in which the money will flow to, but then again, no one has been entirely sure of that. I'd love to get my hands on the data of stock market traders meddling with cryptocurrencies once a full-blown recession happened (which is expected by 2020, by a lot of economists and analysts) and draw a line from there, adding yet another variable on market-cycles if it is really true.

indeed cryptocurrency stands alone but you must know that currently from the presence of cryptocurrency news circulating in several media can give the effect of the price of cryptocurrency, so it is not always cryptocurrency price movements always stand alone.

Stock market and bitcoin is not as collided as people think. Just because stock market collapsed at the same time as bitcoin doesn't mean they are connected.

Lets take a look at when stock market crashed this year, before stock market crashed bitcoin moved from 20k to 6.5k, way before anything happened on stock market, so that is irrelevant as you can see, after stock market crashed and hit the bottom bitcoin dropped to 3k but that was mainly due to bitcoin cash war that saw Craig Wright selling a lot of bitcoins all at once to drop the price so that is irrelevant as well. As you can see 2018 stock market crash and bitcoin crash actually had no connection at all. Could it go down and up at the same time again? Who knows it could but does it mean they are connected? Not at all.

exactly. anyone who says the two are correlated hasn't paid that much attention to the actual movement of each.

Bitcoin started crashing as the stock market was shooting up to its top - negatively correlated. Then bitcoin hit a midterm (feb-nov) bottom at 6000 in early feb 2018 the same day the stock market hit a peak before starting to correct / move sideways. Bitcoin then continually bounced off the 6000 bottom while the stock market bounced back off the top (going slightly higher in the summer than the feb peak), so sort of negatively correlated, but really just each moving according to their own separate market fluctuations. BCH hash war then caused a 50% drop in bitcoin in november, stocks completely un-correlated. Since then bitcoin has been range bound at the bottom, while stocks briefly crashed in november only to rally back almost to its peak recently, totally un-correlated.

There is no reasonable correlation between the two. There's only 3 options (up, down, or sideways) so sometimes they do simliar things, sometimes they do different things, sometimes they do opposite things. Things means no correlation between the two.

Yes, you are right. I was this morning checking charts of both carefully and reached the same conclusion.

In the worst, worst scenario that a crash of the stock markets impacts BTC, average stocks lose around 60%, and taking in consideration that it happens now with BTC at $4000, it could drop to 2000-2500, not a super crash for it considering all time high and potential growth over the next years. I still believe it would go to 100,000 at some point in the future.

The new bubble may not happen this year but maybe next year as speculators are saying bitcoin halving may likely happen next year!  There is a big correlation between bitcoin and stocks market and those relationships is what we are seeing playing out.

There may not be a direct relationship but there's an obvious long term correlation. Ever since the launch of Bitcoin markets, both have remained in a strong bull market. The question is whether/how long this correlation will continue.


All markets are connected, and you better believe when the US sneezes the world catches a cold. This isn't the cold war era anymore. Global markets are incredibly interdependent now, which is why the effects of financial crises spread so quickly from one country to another. It's also why the long term post-2008 S&P500, Nikkei, and DAX charts all look exactly the same.

You think if a major financial crisis and stock market crash wipes out a huge percentage of existing wealth that Bitcoin is just going to remain unaffected? Everyone's going to dump everything except Bitcoin? Why would that be? Especially as Bitcoin investment becomes increasingly mainstream, from average joes to Wall Street?

A stock market crash would be indicative of larger economic problems like growing defaults and unemployment and declining growth. That means across all classes, there is less money for investment and more pressure to liquidate investments (including Bitcoin).


If you're trying to hedge capital, why would you put it into a high risk market? That's just irrational. Money is flowing out from high risk assets to safe havens, not the other way around.

Somehow correlation between financial assets and markets will do its job. Stock market --> Spot forex--> Trading Indexes and list goes on. Crypto platforms will be affected if a new form of money flow starts to come towards cryptocurrencies.

I just talk about title of this topic, about stock and crypto. If talk about news, i think something that really affect for crypto is news. Because sometime crypto can really hype because of good news and suddenly dumped when bad news come.

well what might happen is a financial crisis, I assume that the impact of an unintentional element is that there is not a correlation between stock and crypto. the difference between the both is very far away, so it can't be matched with conditions that are similar, although sometimes the same

it depends if it's just a typical equities crash or if currencies are threatened too. in a typical crash, basically everything crashes (including "safe havens" like gold) as people exit to cash. that should apply to bitcoin like everything else---more so, in fact, because bitcoin is such a high risk asset.

if major currencies like the USD or EUR collapse though, all bets are off. then we might see a huge wealth transfer into gold, bitcoin, and other hard assets as people try to hedge against a collapse of fiat banking.

It requires money to invest in stock or crypto and since stocks has a bigger marketcap and they have a lot of investors, it could surely be bad for the stock market and some might find a place where they can minimize their loses or save from that crisis. I am seeing crypto would become a savior, we don't have company and product here, people are using it only for online transaction and with their money poured in the crypto market, it should result in possible effect, who knows it will help us raise the price and get out in this bearish market.

bitcoin market is still young and small, so we have no way of knowing how it is going to react to different incidents and we have already seen that there are irrational behaviors in the market from time to time reacting to things they shouldn't react to and going in opposite directions of logically expected before.

I'd say anything is possible but my guess is that two scenarios are more possible than others. bitcoin is either not going to be affected at all and continues on the trend that it was on at the time of stock market crash or it will take a positive effect meaning its rise will become faster.

Knowing a fact that the average life expectancy for a fiat currency is 27 years interesting things might happened when dollar will be affected by hyperinflation. What would than happened with bitcoin price in $ and other currencies?


According to a study of 775 fiat currencies by DollarDaze.org, there is no historical precedence for a fiat currency that has succeeded in holding its value. Twenty percent failed through hyperinflation, 21% were destroyed by war, 12% destroyed by independence, 24% were monetarily reformed, and 23% are still in circulation approaching one of the other outcomes.

The average life expectancy for a fiat currency is 27 years, with the shortest life span being one month. Founded in 1694, the British pound Sterling is the oldest fiat currency in existence. At a ripe old age of 317 years it must be considered a highly successful fiat currency. However, success is relative. The British pound was defined as 12 ounces of silver, so it's worth less than 1/200 or 0.5% of its original value. In other words, the most successful long standing currency in existence has lost 99.5% of its value. source: http://www.resourceinvestor.com/2011/01/23/time-different-dollar

I think actually in 2019 I didn't see the stock market fall, because whatever will happen to cryptocurrency prices in the future, I also hope that the stock market in the future will also be fine.

That's an interesting topic that you are raising.
My opinion is that these two markets are totally different (stock market - cryptocurrency market) so it will not behave the same way. I have a strong feeling that when stocks will start crashing, investors will turn their attention to the crypto market in order to stabilize their portfolios.

It also depends how hard will it crash. If it will be fallowed be crisis people will be in need of money and will sell bitcoin just to be able to pay for a house or food. Bitcoin was never affected by market crash or crisis. It would be very interesting and informative to watch it closely paying attention to every detail.

Money in the world right now is mostly digital, however money going into bitcoin is not that much digital. For example you can have leverages in stock markets or stuff like that (forex for example) that basically changes hands and something that is already bought could be combined with other bought stuff and it could be bought all again under one name so you bought 100 things and than those 100 things bought together for the 101th purchase however there is 100 things so that 1 is excessive.

Bitcoin is not like that, whatever people have in their bank account is sent directly to exchange and than purchased, which means all 21 million bitcoins when mined will be hold thanks to money that is hard cash not some made up digital numbers system, that is why stock market could crash all it wants, bitcoin will be super safe.

Correct, sample size of crypto is small that we can't used it a basis let's say the looming financial crisis or when the stock market crashes. So for now, we really don't know what's going to happen. Maybe some of them will moved to crypto as hedge or just will liquidate their assets.


Let's see if either scenario will happen. For one, I don't see any correlation, but as you have said, in times of crisis people do irrational behavior just to survived and we might see a few shifting their funds to crypto or just go for precious metals as leverage.

Panic is a serious problem when we all face a market downturn, even though we should remain calm and trust the Coin. panic will only make the situation worse and we should instead support by increasing financial transactions with the coin. market crashes will always occur and we must respond to them as well and as calmly as possible.

Well, I don't think the crypto market will or can ever crash, because the truth is that we have a lot of persons looking for the price of bitcoin to dip to $100 so that they can make purchase of as many bitcoin as possible, this is the reason why the price of bitcoin can never fall to zero since it is so valuable to a lot of persons in the world and it's not just used for a means of payment but also a store of value.

Bitcoin is truly the digital gold of the physical gold we know about and I am 100% sure that crypto is going nowhere, in short the crypto market is going to surpass the regular stock market.

Stocks and crypto-currencies are not positively correlated, that is why Cryptos are viewed as a very good class for portfolio diversification. The tendency is higher that as the stock market crashes, investors will look for alternative assets to hedge their funds.Possibly that is the reason there was a lot of interest from Wall St.to trade derivatives off bitcoins. A lot of fund managers already have some portion of their assets in Cryptos,albeit a tiny fraction. We will likely see more growth in these as the Cryptosspace evolves

Yes, it's true that a trader's mentality should make a trader think much better. Lots of traders and Bitcoin owners experience tremendous panic when the market crashes. Even though such things should be dealt with with a much calmer attitude. Changing market cryptocurrencies are unavoidable risks, so when something happens, try to think more and make decisions with various considerations.

I really didn’t read my own meaning to it this way but he might actually be right, though this can only happen if the stock market falls beyond control and panic which I have never seen any major stock market fall beyond control but this action can actually force many investors into the cryptocurrency investment as majority of them all their lives has been used to one major form of investment or the other.

Since cryptocurrency, especially bitcoin which is the most popular blockchain investment now, and once bitcoin increases as a result of this act, many other cryptocurrency will follow behind too, aside this point you mentioned, I don’t see any correlation too.

There might be a reason why bitcoin follows the stock market crash. As soon as the stock market starts to crash and reach its minimum position, people finds a chance to invest on those stocks for cheap. Thus, they get out of bitcoin investment by selling their bitcoins and slowly jumps into the stock market. As a result, the price of bitcoin also starts to fall. This is just a theoretical assumption I am giving. There might be some other underlying reason behind this crash.

Trump just attacked the FED again. Time for the FED to go, imagine if Trump finally rids the world of the FED!?!?

huh ? both are not simillar so how can you say that  bitcoin follows the stock market ?


no i dont think so . why would they sell thier cryptos just to shift on stocks ? when we know that cryptos are more valuable as it can provide better income compare to stocks although stocks might be more stable .


the crash of bitcoin is caused by other reasons such as fuds/speculations/news   , manipulation caused by whales , or people that simply sells their bitcoin because they badly need a cash .

i don't see the stock market as leading bitcoin. it's more that they are correlated because they are both directly affected by some of the same global economic factors. the idea of "risk-on risk-off" (https://www.investopedia.com/terms/r/risk-on-risk-off.asp) is illustrative of the connection:


so it's not that bitcoin follows stocks. it's that both markets are high risk and are likely to decline during "risk-off" periods like during/after financial crises and recessions.

The Stock Market is very different from the Crypto market, I think that the Stock Market moves much slower than the volatile Bitcoin market, by doing an analysis you can see that both for the Stock Market and for the Bitcoin shares, they have phases of the student market, which are, accumulation and distribution, bitcoin is far from being a bubble; Currently, following Wyckoff's philosophy, we are in the accumulation phase. And as stated in the book "A Random Walk by Wall Streeth" the bubbles have periods of total crash, if we compare with bitcoin is still far from getting there.

Stock market crashing hard these last three days and BTC exploding. Very interesting.

Opinions?

Anyone?

Stock market continues crashing and BTC running

I have seen people flee from stocks and get into crypto in those situations, but the usual is metals like gold and silver. I don't see any direct correlation with stock market which is playing by the rules of bubbles and crashes from the Chicago school with deflationary currency which go closer to the ideals of the Austrian school (which prevents bubbles from forming in the first place).

If the stock market crashes, bitcoin will not be dragged with it. It might be affected, but not as much as you seem to think...

And i don't think bitcoin will reach $100k anytime soon, unless the USD collapses.

Stock market will be pumped with fiat created out of thin air and added to the debt for quite some time to come, until the value of the dollar evaporates from hyperinflation or the US defaults on the ever rising debt.

Another huge red day for the stock market and green for crypto

If that happen i think that crypto market will grow, because people will search where to store there money better and better invest on crypto then to lose a lot of value holding fiat.