Stock Market took a huge dive, Cryptocurrency follows

[Qcrypto]

Hate to be the bearer of bad news...
Well, bad for some, good for others.

Such is life...same as that song:

"The power of love, is a curious thing,
make a one man weep, and another man sing"

Could be perfectly translated into Trading, just change the word "love" with "market"

As of today, March 9th, 2020:
Stocks Index Dow Jones is down by $2000 (-8%)
Cryptocurrency Market cap is down by $18B (-7,8%)

What do you make of it?

Source

[Cnut237]

Well, one takeaway is that bitcoin is not seen as a safe haven or a store of value.

I think we all knew that anyway, but here is some further evidence. Far from being uncorrelated or even negatively correlated to traditional assets, bitcoin is positively correlated. People don't rush to bitcoin in times of trouble. Instead people buy bitcoin when the normal markets are surging and confidence is high and people are more willing to take risks... because that is how bitcoin is perceived in the wider market, as a risky gamble, not a safe haven.

But we are still in the early days. Bitcoin, as has been explained many times, is in theory the perfect store of value, decentralised and deflationary. That's the theory. In practice, the crypto markets and young and immature, volumes are low compared to traditional markets, there is little to no regulation... the whole crypto arena is ripe for speculation and manipulation, which leads to volatility, which leads to more volatility, etc etc.

Remember we are just partway along the road; we are  a long way from an end state. Crypto is the Wild West, but it will mature and bitcoin will indeed become a safe haven... because it is so much better than the alternatives.

[TimtheYoutuber]

I would wait a week or two to make an investment in stocks and crypto. I mean, from my point of view its beautiful because I missed out on some energy and oil stocks that dropped like 20% in a day. These billion-dollar companies that are not going away, so I am seeing it as a great investment.


You don't want to catch a falling knife though, so I would wait for a little.

[avikz]

Hate to be the bearer of bad news...
Well, bad for some, good for others.

Such is life...same as that song:

"The power of love, is a curious thing,
make a one man weep, and another man sing"

Could be perfectly translated into Trading, just change the word "love" with "market"

As of today, March 9th, 2020:
Stocks Index Dow Jones is down by $2000 (-8%)
Cryptocurrency Market cap is down by $18B (-7,8%)

What do you make of it?

Source

Indeed stock markets are bleeding around the world and crypto market is no exception. But the question is that, are they correlated? Frankly speaking, I don't see any correlation between crypto market and traditional stock market. It may just be a coincidence that both markets are facing the heat at the same time. The current drop of crypto prices may be linked to the heavy sell off from two well known scam in crypto history - Plus token and MTGox. Read below,

https://coingape.com/bitcoin-scam-sell-off-mt-gox-plustoken/

This news makes more sense!
 

[LeGaulois]

@avikz a correlation like?

I know a lot of people usually say "no relation" "coincidence" etc but it's not true. Often traditional markets and Bitcoin behave the same way. Not only during the bad periods, during the good ones too. There are so many opportunities to see it.
And why it shouldn't be? Bitcoin has more people using it as an investment that people using it for real cases, I mean BTC is traded like the traditional markets.

[Harlot]

I know a lot of people usually say "no relation" "coincidence" etc but it's not true. Often traditional markets and Bitcoin behave the same way. Not only during the bad periods, during the good ones too. There are so many opportunities to see it.
And why it shouldn't be? Bitcoin has more people using it as an investment that people using it for real cases, I mean BTC is traded like the traditional markets.

Bitcoin Outperforms Nasdaq 100, S&P 500, Grows Whopping 37% in 2019

It doesn't seem like it, they may have the same movements during the bullish and bearish market in terms of trajectory but Bitcoin has been always outperforming the stock market in terms of gains, the gains are considerably big that NASDAQ even called it the best performing asset in 2019. So even if they have the same trajectory in the market you will always see Bitcoin outperforming gains compared to most bluechip stocks we have in the market. I'm also part of the people seeing no correlation between the crypto and stock market but this event is an exemption with us having a global pandemic at hand I know that it has influenced and inserted fear among all investors in all types of markets that is why we are having these kinds of sell-offs happening right now. 

[pooya87]

WRONG.
cryptocurrencies are all following bitcoin price which is why they are dumping 10% harder than bitcoin. and bitcoin is currently following a big panic in the market that has unknown origins and has nothing to do with stock market crashing since bitcoin has never followed and is not following any other market including stock market ever. i find it absurd that some people are trying to convince everyone that after 11 years bitcoin has suddenly decided to follow another market!

[mk4]

Cryptocurrency Market cap is down by $18B (-7,8%)

What do you make of it?

We're already in year 2020 but apparently people still fail to realize that bitcoin and the cryptocurrency markets are volatile as hell; as if price drops like this are anything new. Stop looking at short-term price movements and just simply look at the bigger picture.

[avikz]

@avikz a correlation like?

I know a lot of people usually say "no relation" "coincidence" etc but it's not true. Often traditional markets and Bitcoin behave the same way. Not only during the bad periods, during the good ones too. There are so many opportunities to see it.
And why it shouldn't be? Bitcoin has more people using it as an investment that people using it for real cases, I mean BTC is traded like the traditional markets.

Stock market is based on fundamentals. Stock market is regulated. Every index is built on some certain stock indexes, like Nifty in India is built on 50 stock indexes, Nikkei in Japan is built on 225 blue-chip stock index. The calculation is more complex but this is the basic of stock market indexes. So stock markets are bound by geography. So they are more prone to the local issues rather than the global issues. Like in China, a lot of local industries and factories are shut due to COVID-19. So it's no wonder that Chinese stock market is facing a big hit. So when Chinese stock market was started to drop, bitcoin was still increasing to 10k regime, precisely during end of Feb to beginning of March. So it's highly unlikely for bitcoin to imitate the behavior of traditional stock market.

For the same reason, technical analysis that works on stock market, doesn't always works on crypto market, because crypto market serves a global audience. It's not easy to use the existing techniques to capture the human emotion of such broader geography!

[samcrypto]

Cryptocurrency Market cap is down by $18B (-7,8%)

What do you make of it?

We're already in year 2020 but apparently people still fail to realize that bitcoin and the cryptocurrency markets are volatile as hell; as if price drops like this are anything new. Stop looking at short-term price movements and just simply look at the bigger picture.

Yes, its very volatile and I think every bad news around the world bitcoin is moving negatively, we should to be used on that kind of trend because that's our story 10 years ago and we are still on that kind of trend. Bitcoin hits the level of $3k and jump high up to $13k within a year, learn from it. Cryptocurrency follows the current trend in the market, and its follows the current panic of the people but with the current situation I don't think stocks is the reason of the dump.

[xvids]

We're already in year 2020 but apparently people still fail to realize that bitcoin and the cryptocurrency markets are volatile as hell; as if price drops like this are anything new. Stop looking at short-term price movements and just simply look at the bigger picture.

I agree crypto has been around for almost 11 years now and they still haven't got used to it's volatility?
We could see more of this kind of events in the future and I am sure if they look at the past price as well,
This isn't the first time that BTC has drop drastically and I am sure that it wouldn't be the last.
Only those who look for a short time investment would be scared of this crash because the long term holders are surely enjoying this because it is another chance for them to accumulate more of what they already have.

[Kuffy]

We are in a completely new world. Stock markets are no longer based on fundamentals, but based on the activities of the central banks, and people are starting to realise that. The market started to tank over the corona virus and the oil wars, and that created a bear squeeze. Speculators are having to sell their safe haven assets to cover themselves, and this has affected the price of gild, silver and Bitcoin. These movements can create their own secondary bear squeezes. It looks as if it is another great time for the acquisition of safe haven assets like Bitcoin. Just make sure you get your timing right.

[nutildah]

WRONG.
cryptocurrencies are all following bitcoin price which is why they are dumping 10% harder than bitcoin. and bitcoin is currently following a big panic in the market that has unknown origins and has nothing to do with stock market crashing since bitcoin has never followed and is not following any other market including stock market ever. i find it absurd that some people are trying to convince everyone that after 11 years bitcoin has suddenly decided to follow another market!

Who said other cryptos weren't following bitcoin? Of course they follow bitcoin -- nobody is disputing that.

To say it has "nothing to do with stock market crashing" is probably incorrect. The reason why is because Wall Street is currently more invested in bitcoin than ever before, thanks to futures trading vehicles launched just in the past couple of years. Wall Street considers bitcoin to be the highest risk asset among high risk assets, so naturally it will be the first dumped when a panic happens.

Another thing to consider is that we only know how bitcoin reacts to a bull stock market; perhaps only now for the first time ever are we seeing how it reacts to a bear stock market.

[pooya87]

Who said other cryptos weren't following bitcoin? Of course they follow bitcoin -- nobody is disputing that.

well, OP is saying "cryptocurrencies are following stock market" which is wrong because they are following bitcoin. whether bitcoin is following stock market is disputable and although you raise an interesting point but i still say it is not following it.
this drop is like any other similar drops due to a negative news. whales using this panic as an opportunity to dump/manipulate and short bitcoin to make profit then buy the bottom.

[meanwords]

What I think is that it is just a coincidence that Bitcoin and stock market got dump at the same time. I'm sure that if plustoken scam didn't happen, Bitcoin would still be flying right now. We just had a problem along the way and I don't think that Bitcoin and stock market is correlated that much but it is sure that they almost have the same investors.

[nutildah]

Who said other cryptos weren't following bitcoin? Of course they follow bitcoin -- nobody is disputing that.

well, OP is saying "cryptocurrencies are following stock market" which is wrong because they are following bitcoin. whether bitcoin is following stock market is disputable and although you raise an interesting point but i still say it is not following it.
this drop is like any other similar drops due to a negative news. whales using this panic as an opportunity to dump/manipulate and short bitcoin to make profit then buy the bottom.

Bitcoin is a cryptocurrency. Irrespective of that, its pretty much been following the stock market in the last 2-3 weeks or so to a T:



This is only a recent phenomenon, and it could very well be that "correlation does not equal causation," etc. I'll also point out a strengthening year-over-year correlation between two more traditional assets: the Grayscale Bitcoin Trust (GBTC) and the SPDR S&P 500 ETF Trust (SPY). The first is a relative indicator for the movement of bitcoin and the second of the stock market. There was zero correlation between these two assets in 2019, but its a 38% correlation thus far in 2020.

Here is the average correlation of daily returns between the two assets during the following years:

2016: -1%
2017: 9%
2018: 13%
2019: -3%
2020: 38% thus far

https://www.portfoliovisualizer.com/asset-correlations

Whats interesting is if you look at the "Rolling Correlations" tab, it would appear that GBTC is as inversely correlated to SPY as it is positively correlated, which would yield an average 0% correlation.

You can see an uptick in rolling correlation beginning in early/mid Feb. I suspect the trend is in the positive direction, at least for now.

[Questat]

I believe crypto will be independent from stocks, those stocks investors are aware of crypto, so probably they also consider crypto as a good alternative for investment, this is a global money where no one owns but those who hold bitcoin.

it's true that bitcoin dump when the stocks are down, but it does not happen all the time, for sure crypto will recover soon like it always do.

[Yudhisthir]

And the stock market had a correction today so did crypto. I said it's correction because I don't think the stocks could go any bullish on such dire circumstances where people are not being able to work and factories are closing. The exact effect on crypto is still to be seen as almost all of crypto operation are automatic and requires almost none human intervention.

[pooya87]

Bitcoin is a cryptocurrency. Irrespective of that, its pretty much been following the stock market in the last 2-3 weeks or so to a T:

my point is that you can not make a conclusion based on 0.3% of the lifetime of bitcoin! and that's what your chart shows, only about 0.3% of the total time bitcoin was around. things like that are called a coincidence.
now if that was half a year of following stock market then it would have been a different discussion.

[nutildah]

Bitcoin is a cryptocurrency. Irrespective of that, its pretty much been following the stock market in the last 2-3 weeks or so to a T:

my point is that you can not make a conclusion based on 0.3% of the lifetime of bitcoin! and that's what your chart shows, only about 0.3% of the total time bitcoin was around. things like that are called a coincidence.
now if that was half a year of following stock market then it would have been a different discussion.

That same 0.3% is the same period of time that stocks have been in a bear market since the birth of bitcoin. Therefore, its reasonable to believe its not just a coincidence. The last time the stock market had a dip of reasonable size (from Sept - Dec 2019) -- guess what -- bitcoin dipped as well.