The link between a successful economy and falling investment markets.

[juicyjanet88]

For anyone not following the news the last day the Dow Jones index fell by record numbers in one of the biggest falls in years, other index's were also hit hard. The reason may not be one that you'd think. In fact it is largely attributable to unexpected uptrend's across the global economy. Let's take the US for example:

On the 2nd of February the US labor department released figures showing jobs and wages increases that exceeded expectations. Higher wages and more employment leads to more spending, more spending leads to higher inflation and in turn the FED will need to combat this by increasing interest rates (if interest rates are higher people borrow less and save more, hence spending goes down).

So higher interest rates, what does that mean for investments, well it's quite simple. Investors will get a better comparable pay-off in safe investments like stocks and bonds if the interest rates increase. Therefore it becomes a more attractive alternative to stocks.

It's always fascinating to see how the economy works in circles and how things are not always as they first seem. It wouldn't surprise me if some of the hurt the crypto markets are experiencing could also be attributed to this. If you look at other economies globally you can see the same thing happening.

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[eminemcookie]

It's something that always baffled me when I was first trying to get my head around this. How the success of the employment market can actually lead to the downturn in the investment market. Intuitively you'd think the opposite as incomes increase more people have spare money to invest and the market increases.

[Bobby park]

The irony of life. I think it is impossible to become a successful economy if there is falling of investments specially if it is large investment companies. It is not consider to be a successful if there is a downturn and we all know that economy is large scope. Investments contribute well to the fluctuations of our economy so I guess it is not possible to happen.

[Wheelige]

I noted interesting points concerning the idea in the post.
1. The US market has bounced today as has the crypto market. This seems hard to see as a coincidence. There are the same correlations between spending, investing and global economics with crypto and traditional stocks.
2. The crypto economy has shown me once again why it is better than traditional stock market. In New Zealand there was a public holiday yesterday and most people had Monday off too. So the NZX was closed for the period of the big US sell off. There was no change in prices because nothing moved, and there was a lot of chat about a big dip when it finally hit. Crypto on the other hand is global, and does not take days off. Everything happens in real time and you cant anticipate market movements based on others simply because yours is closed at the time.

[CHENIEN]

This is a comparison between successful economy and falling market, I don't think so, that how can be a successful economy, if a certain country have a falling market, maybe your point is all about what happen today in bitcoin situation about price status on which the price is falling and also the investment market also falling down, however even the price is falling but still the economic status of bitcoin is rise because people are still adopt and access bitcoin.

[juicyjanet88]

I noted interesting points concerning the idea in the post.
1. The US market has bounced today as has the crypto market. This seems hard to see as a coincidence. There are the same correlations between spending, investing and global economics with crypto and traditional stocks.

I think there's definitely some relationship but it also happened to be somewhat of a coincidence at the same time. I think the expectation of higher interest rates would have contributed to the fall in crypto prices but the main reason for the turnaround was the news coming out of the US that a 'do no harm' approach will be taken.

2. The crypto economy has shown me once again why it is better than traditional stock market. In New Zealand there was a public holiday yesterday and most people had Monday off too. So the NZX was closed for the period of the big US sell off. There was no change in prices because nothing moved, and there was a lot of chat about a big dip when it finally hit. Crypto on the other hand is global, and does not take days off. Everything happens in real time and you cant anticipate market movements based on others simply because yours is closed at the time.

I wouldn't necessarily say that is an advantage, the way the stock market work allows people to escape and have a life outside of that. As many of us in crypto can attest to it can be really hard to escape from your computer screen for too long as you don't want to miss anything.

Why do you see it as being an advantage for crypto that the market never sleeps?