[2018-12-25] Crypto's Christmas Rally Could Indicate Bitcoin’s Independence from

[cybersofts]

Crypto's Christmas Rally Could Indicate Bitcoin’s Independence from U.S. Stock Market



One of the oldest questions in cryptocurrency is whether Bitcoin is tethered to the performance of the overall stock market. The current crypto market rally could indicate that Bitcoin and other altcoins are independent from dips in U.S. stocks.


The U.S. Stock Market Plunges
Up until the Q3 of this year, the stock market has performed exceptionally well compared to the cryptocurrency markets. As the crypto markets slogged through a year of losses, the U.S. stock market was experiencing another strong year of performance coming out of 2017.

However, beginning early October, the S&P 500, the Dow Jones Industrial Average, and the Nasdaq Composite Index wiped out most of 2018’s gains.

The Dow Jones Industrial Average experienced some of its largest losses since 1931—the time of the Great Depression—losing 16.3 percent since October. The Nasdaq Composite Index (COMP) is even set to close in a bear market (usually defined as a drop of at least 20 percent from a recent peak).

The fall in stock prices is attributed to a chorus of investor concerns, including the pace of the Federal Reserve’s interest rate increases, the looming U.S. government shut down, concerns over the U.S. China trade war, and signs that the international economy is stalling.


Cryptocurrency Market’s Santa Rally
As of this week, the cryptocurrency markets have experienced a strong Christmas rally. Bitcoin is up 22.6 percent, going from $3,270 back to $4,000. And, for the first time in nearly a year, the overall crypto-markets have outperformed Bitcoin, gaining 28.7 percent and adding an additional $30 billion in market capitalization. For reference, the S&P 500 is down 6.7 percent since Monday.

That said, both the S&P and the cryptocurrency markets have experienced large losses since October. The S&P 500 is down 17 percent from October highs, while the crypto-markets were still in the midst of a bear trend, dropping 40 percent and shedding $90 billion in market capitalization.


Long-Term Implications
Nonetheless, the crypto market’s Christmas break out could have other implications. A long-standing question among crypto traders has been whether the U.S. stock markets and cryptocurrency markets are correlated. Some have even speculated that Bitcoin could act as a safe haven during stock market downturns, although most major news outlets including Forbes and CNBC have dismissed the claim.

Ryan Rabaglia, head of trading with a cryptocurrency dealing firm OSL in Hong Kong, told Bloomberg that:

    “The days of crypto being the safe-haven play and having a high degree of detachment from the rest of the world are seemingly diminishing.”

Yet, the most recent crypto-market rally could refute Rabaglia’s statement. As the stock market tumbles, the recent crypto rally could reaffirm that the stock markets and cryptocurrency market are untethered.

Travis Kling, a crypto portfolio manager, reaffirms that idea:

    Crypto has never existed during a bear market in traditional assets.

    BTC was birthed at the very beginning of the largest monetary experiment ever- globally coordinated QE. Ending QE is causing pain

    There is a significant chance Crypto is the best performing asset class in 2019 pic.twitter.com/vIdKTrm5sV

    — Travis Kling (@Travis_Kling) December 23, 2018

Even if Bitcoin is not deemed a conventional safe haven asset, independence from the U.S. stock market could make crypto useful for a host of different trading strategies. Fund managers may want to include Bitcoin in diversified portfolios, retirees may include crypto in their 401Ks, and speculators can rest at ease knowing the stock markets won’t bring down cryptocurrency with it.


Reference: https://cryptoslate.com/cryptocurrencys-christmas-rally-could-indicate-bitcoins-independence-from-u-s-stock-market/

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[hatshepsut93]

Well, today Bitcoin is down 10%, so the Christmas rally is officially over, which is a bit funny considering that yesterday news sites were full of prediction articles about testing $4,500 and $5,000, and some people have even called bottom and said that we have started recovering.

But Bitcoin was always independent from stock markets, simply because its own volatility is far greater than any potential outside influence. Every time there's a big move, someone tries to tie it to some world events, but time has proven that those are just coincidences.

[Kakmakr]

This situation will change when the institutional capital enters the Bitcoin market through the approval of Bitcoin ETFs. The same capital flowing in and out of stock markets will be flowing through our Bitcoin market then and this will tie Bitcoin to Stock market behaviors.

I think some people might have bought some late Xmas gifts with their Bitcoin hoard and that might explain the small dip in the price again. 

[buwaytress]

Well whoops, talk about bad timing then? Christmas hours just saw double digit losses for the entire crypto market. Bitcoin itself took to a slower recovery during the past week but seems to have lost all of it now to 25th profit taking.

Though I have to say, Bitcoin's price hasn't really been following any stock market trends. US stocks are underwater, this whole year Bitcoin's floundering as well, but that's just a coincidence I feel.

Institutional money's tired. It's been taking a battering in stocks and it's not ready to gamble on Bitcoin now. What's been set aside for crypto's long entered the market, not waiting for futures or Bakkt.

[cawa88]

Bill to Curb Iranian National Crypto Filed in US Congress

[rodskee]

There's  nothing Christmas rally bitcoin they itself as volatile crypto currency
Christmas or any kind of holiday's celebrate by world bitcoin moves their ways as volatile currency
Nithing can dictate or control about bitcoin where there he goes

[BitHodler]

Well, today Bitcoin is down 10%, so the Christmas rally is officially over, which is a bit funny considering that yesterday news sites were full of prediction articles about testing $4,500 and $5,000, and some people have even called bottom and said that we have started recovering.

You are quick with your judgements as well. We're currently going through a normal correction after a pretty strong bounce up, especially when you take the weekend into consideration.

The market is weaker during the weekends and that once again shows. I'm sure those who know how to play this market did well shorting yesterday. We'll have to see next week what's happen to 'officially' consider it over.

Next week we have the CME futures contracts expire so I expect some movements around that point. Their volumes have gone up considerably and with that their significance increases as well.

[milewilda]

Well, today Bitcoin is down 10%, so the Christmas rally is officially over, which is a bit funny considering that yesterday news sites were full of prediction articles about testing $4,500 and $5,000, and some people have even called bottom and said that we have started recovering.

But Bitcoin was always independent from stock markets, simply because its own volatility is far greater than any potential outside influence. Every time there's a big move, someone tries to tie it to some world events, but time has proven that those are just coincidences.

You cant really blame people not to correlate crypto from traditional stocks and forex when it comes to these events.They can tie up anytime as they like just like and theres no sure if prices arent really tied up at all but the sure thing that volatility would really be entirely different among the two.Im getting used to it about mixed speculations from people around crypto community or even news sites came from popular personalities.

Lots of hopes been broken for sure specially to those people who expect that the price increase on last years on last month is still the same but now it proves out that anytime it can turnover into different scenario.

[btyco]

What we should take note of is the pace at which the price increased. Ethereum doubled in 1 week and bitcoin itself pulled up the entire market. There is strong demand so when the market recovers for real, it will be super fast

[Buttermellow]

Stock market exchange and cryptocurrency are the same in concept especially in trading but cryptocurrency is far beyond better if it will only legalized because it will attract more users to join since its market price is not like the fiat money where its value is much stable. Cryptocurrency has high volatility and that is why more traders and asset holder will make its way to cryptocurrency for its market price will surely gone high compared to fiat money value.

[squatter]

Well, today Bitcoin is down 10%, so the Christmas rally is officially over, which is a bit funny considering that yesterday news sites were full of prediction articles about testing $4,500 and $5,000, and some people have even called bottom and said that we have started recovering.

But Bitcoin was always independent from stock markets, simply because its own volatility is far greater than any potential outside influence. Every time there's a big move, someone tries to tie it to some world events, but time has proven that those are just coincidences.

The markets have moved upwards together for many years now. So, that's a very long history of coincidences -- so many that you have to wonder if they're really coincidences.

There's no way to prove that the markets are completely independent. People just rationalize and say, "They must be independent because Bitcoin is volatile or speculative or a different kind of asset." But that doesn't prove anything. It's just rationalization.

Even strongly correlated markets don't move in lockstep all the time, so I'd take this recent separation with a grain of salt.

[1Referee]

What we should take note of is the pace at which the price increased. Ethereum doubled in 1 week and bitcoin itself pulled up the entire market. There is strong demand so when the market recovers for real, it will be super fast

Ethereum had a positive boost due to Raiden as tier two scaling update, plus the block rewards will shrink from 3ETH to 2ETH next month, so it's not really a surprise that you saw a pop there.

In the end, I strongly believe that it will be altcoins triggering the recovery, mainly because of how all the shitty ICO's will then be stimulated to hold their bags instead of converting them to BTC>USD, which has been negatively affecting this market for a long while now. Even after Ethereum's +90% drop it still looks like there is more air that needs to get out.

[squatter]

In the end, I strongly believe that it will be altcoins triggering the recovery, mainly because of how all the shitty ICO's will then be stimulated to hold their bags instead of converting them to BTC>USD, which has been negatively affecting this market for a long while now. Even after Ethereum's +90% drop it still looks like there is more air that needs to get out.

It would be impossible to tell one way or the other since Bitcoin and altcoins are correlated. If Bitcoin stops declining, so will altcoins. If altcoins stop declining, that's less selling pressure on the Bitcoin market.

I'm guessing altcoin sellers aren't the primary source of the bear market now that their markets are worth so little. Bitcoin has been in an obvious bear market for a year -- that's enough reason for price to keep falling regardless of altcoins. Either way, what you're saying applies equally to both markets: Eventually, everyone who wants to sell has sold. Then the price will start rising again. The question is when?

The only measure we really have for "low prices" is an 80-95% decline. Betting on much more at this point is a huge gamble.

[tyz]

In my opinion, assets are generally not completely independent from each other. But that they are not completely dependent has shown Christmas. The price slump on Wall Street has led to a lot of cash being freed up and this is usually then invested directly in another assets. And some of the money went to the crypto market. This is a good sign and an indicator of where much money will flow when it comes to an economic crisis.