When the US stock market goes down Bitcoin goes down

[Nhor1011]

Today, the US stock future goes down near 900 points then the bitcoin prices goes down too.  It happened the same in March 2020 when the US stock market goes down then Bitcoin goes down $4500.  Any one knows the psychology or the mood of the trader?  Thanks.

I think most of the investors stop investing because they know that the stock market goes down,crypto market will go down too because most of the people are lack of financial. Investors will also think that many people are not capable to invest and trade that's why they think that because stock market is down,they are going to panic selling  which could lower the price of crypto.

[TravelMug]

yes that is true. bitcoin follow stocks, but it should not be like that. when stocks falls money should flow into bitcoin

Perhaps it was due to the Covid-19 that is still up in the air (no pun intended). What I mean is that investors are still reluctant to invest to neither traditional stocks or crypto. That's why when there are negative news, both market crashes and investors are not moving their funds anymore.

So there is a tiny bit of correlation, unless everything has settled down and investors are willing to play in both markets again.

[Sebas.tian]

Today, the US stock future goes down near 900 points then the bitcoin prices goes down too.  It happened the same in March 2020 when the US stock market goes down then Bitcoin goes down $4500.  Any one knows the psychology or the mood of the trader?  Thanks.

The first that happened during the first wave of the pandemic was the caused of the corona virus, which hit so hard on the world economic and causes the investors to fear the downtrends of the market. Investors want to see their portfolios growing and not in negative, this gave them the mind to sell off their investment. The recent downtrends was the fear of the second wave of the pandemic, at this time investors are more afraid to lose like the first wave. Either the cryptocurrency or stock investors, they are all afraid of loses.

[Latviand]

Today, the US stock future goes down near 900 points then the bitcoin prices goes down too.  It happened the same in March 2020 when the US stock market goes down then Bitcoin goes down $4500.  Any one knows the psychology or the mood of the trader?  Thanks.

It was a panicked selling mood. is understandable because this is when the epidemic began to spread so people will not need to hold financial assets anymore. they will sell for a lot of cash so they can buy food. That is why when there is instability in the economy out there, the financial market will fluctuate so strongly. We are also investors and Bitcoin is just a financial asset, it will not escape panic selling.

That's their way of surviving this pandemic, they do panic selling in order to buy their necessities as this quarantine really cause inconvenience to all of us. US stock market affects the bitcoin's price so much that if it goes down, bitcoin will also go down. Bitcoin's value is what we need right now to buy food for our family, but if you have some spare amount of money that you can use for your budget, then there's no need for you to do panic selling. Instead, you will still wait for the economy to become in a better state where bitcoin's price will improve and also the US stock market. This pandemic is not a long-term suffering. I believe that bitcoin will save us soon.

[Spaffin]

According to studies of the coinbase cryptocurrency exchange, the cryptocurrency market does not have any dependence on the stock market, but nevertheless, today there is a certain connection between Bitcoin and the stock market, which first began to appear even in almost 2016. This is primarily due to the correlation between gold and Bitcoin. This connection was especially noticeable at first in 2019, when economic problems began to rise, which were accompanied by an intensification of the tense political situation in the world. And already in 2020, due to the spread of coronavirus, this situation is most palpable and is exacerbated very actively.

[Zackgeno96]

Today, the US stock future goes down near 900 points then the bitcoin prices goes down too.  It happened the same in March 2020 when the US stock market goes down then Bitcoin goes down $4500.  Any one knows the psychology or the mood of the trader?  Thanks.

This trend is just a recent trend and previously the reverse used to happen a lot of times. When the stock market used to fall there was always an increase in price of bitcoin and when the Chinese stock market used to fall some points then the bitcoin also used to loose its value but now this trend is changed. The same happened when the lockdowns were being announced around the world and Corona virus was declared as a pandemic but the recent fall didn't had any reason behind it.

[RealMalatesta]

When stocks drop that doesn't always means that there is money going out, not at least as much as you think there is because when someone wants to sell their stock and there is no buyers the price drops, as you can see nobody bought a single stock and nobody has any money in that situation, the price dropped just because nobody was willing to buy for that price and it had to drop.

Now, there is of course some money in bank accounts in fiat form instead of stocks after a big drop most of the time but not as much as you think. And one of the reasons why they are in cash form is the simple fact that people didn't wanted to be invested and wanted to be in cash just in case and wanted to make sure their money is not gone. Putting it in bitcoin doesn't really change that and wouldn't really help them at all.

[rexxarofmoknathal]

Despite being called an uncorrelated asset, Bitcoin is frequently correlated with traditional markets when there is a significant price movements and change in sentiment, such as during a pump or crash.

Between these periods, Bitcoin can largely be considered uncorrelated, since it tends to move in a way that cant be predicted from the equities, bonds or commodity markets.

[exstasie]

Despite being called an uncorrelated asset, Bitcoin is frequently correlated with traditional markets when there is a significant price movements and change in sentiment, such as during a pump or crash.

Between these periods, Bitcoin can largely be considered uncorrelated, since it tends to move in a way that cant be predicted from the equities, bonds or commodity markets.

If the stock market is neutral to bullish, the correlation tends to fall. When the stock market is bearish the correlation increases; they fall together and recover together.

It's a very similar dynamic to BTC vs. altcoins. When BTCUSD is neutral to bullish (and especially sideways ranging) altcoins are free to pump independently of it. On the other hand when BTCUSD is in a bear market, altcoins are undoubtedly in a bear market too.

All of this suggests to me that the correlation is derived from the fact that stocks, BTC, and altcoins are all viewed by investors as risk assets to differing degrees.

[madhavsinghrajput]

I think right now every market runs according to US market.One reason is it is the largest market financially with companies registered globally and people invest in them from all around the world.Secondly US has the largest number of crypto traders and if there financial condition is not good than they will withdraw or sell their investment.

[pixie85]

yes that is true. bitcoin follow stocks, but it should not be like that. when stocks falls money should flow into bitcoin

Bitcoin was looking good after the first Covid dip because it recovered much better than stocks. There were even opinions that it's going to be like gold and rise when stocks are falling.

The second dip is looking much worse with Bitcoin and S&P 500 looking almost the same.

It's still better to hold Bitcoin than stocks though because it dips and recovers faster but I'll admit that I was expecting a slightly better performance.

[exstasie]

yes that is true. bitcoin follow stocks, but it should not be like that. when stocks falls money should flow into bitcoin

Bitcoin was looking good after the first Covid dip because it recovered much better than stocks.

It depends which stocks you look at. The NASDAQ 100 index recovered even closer to its yearly highs than BTC did, 0.3% vs. 0.9%. Some stock sectors are obviously recovering much better than others. Tech, biotech, e-commerce, and a few others have made huge gains while others are still in the dumps. I think we should take a more holistic approach when making these comparisons.

The second dip is looking much worse with Bitcoin and S&P 500 looking almost the same.

They've been looking almost the same for 4 months now. The only real difference is the magnitude of volatility.

[STT]

when stocks falls money should flow into bitcoin

Dollar is a funding currency, its one of the most liquid largest and cheapest market traded currencies in the world.    What will happen is money is borrowed in dollars to buy various goods, even including BTC.   When sentiment turns and market pulls back the dollars that sold come back to repay the debt and settle the trade hopefully for a profit.    Theres usually a rush for that to happen in any proper sell because so much money is borrowed it causes a great wave to close out fast and first not to be the last to spot the tide change and get wet.
   The way this is most obvious is by difference in currency interest rates, if say I borrow Australian dollars and they had a 5% interest then I must pay that on top of my fees.   To go borrow AUD and go long USD would pay poorly unless the move to loss of value for AUD was greater, quite certain to the trader.  Its part of why a central bank raises rates to stop their currency falling too low, raising import costs.    The reverse however is happening, USD is very cheap to take on account and spend and then I simply go deposit this in AUD and gain my 5% a year so Im very happy so long as the sun shines and we expand or believe Australia will expand.   Same for BTC, it rushes up and people sell dollar to come to crypto and vice versa they'll run like the wind to close and sell out.
   Similarly stocks, when markets fall alot of the effect is hot money borrowed from easy money regimes and Dollar is the biggest of all.  Thats why we get correlation, its harder to tell which sector performance can stick and grow its revenue, business.     BTC has no yield but its also hard to mine, its not a funding currency for other ventures really.

[dragon695]

I think right now every market runs according to US market.One reason is it is the largest market financially with companies registered globally and people invest in them from all around the world.Secondly US has the largest number of crypto traders and if there financial condition is not good than they will withdraw or sell their investment.

Not quite true! Every market is affected by the global economy! There's no particular national economy that can affect all of the markets even the U.S or China. Also, there's no statistic that proves the U.S has the largest number of crypto-traders not to mention a lot of traders in other countries registered as U.S citizens (fake info). Therefore, it's not accurate to say that all market depends on the U.S economy.

[Sanitough]

Bitcoin is not correlated with the US stock market, you can see the difference, yes bitcoin dropped at the price you mentioned but it rises back again. In fact, it reached $10K days before the halving if I am not mistaken and now bitcoin is already trading above $9k.

You can see that there's a big difference, the US stocks continues to struggle while bitcoin is quite stable already.

Maybe the initial effect was not good for bitcoin due to panic, but then it slowly recovers and we are seeing it's good price now.

[culuuton]

I think right now every market runs according to US market.One reason is it is the largest market financially with companies registered globally and people invest in them from all around the world.Secondly US has the largest number of crypto traders and if there financial condition is not good than they will withdraw or sell their investment.

This isn't really true, it only has a small impact on the cryptocurrency market. Why is bitcoin price in 2017 so high? Was the US stock market also similar at that time? And then how does bitcoin fall free?

[timmmers]

We thought for a long time that Bitcoin is not correlated to the classic stock market - that it is an asymmetric asset, but more and more we see, that it is really correlated. Simply, when investors are afraid, they do not invest, but when they see an opportunity they buy. And it doesn´t matter what asset it is at the end if it is crypto, oil, precious metals, or stocks. It is either a rising trend or a declining trend.

[South Park]

yes that is true. bitcoin follow stocks, but it should not be like that. when stocks falls money should flow into bitcoin

This could be the case in the future if investors begin to see bitcoin as a store of value but it seems we are not there yet, investors see bitcoin as a highly speculative asset and as long as this is the case then whenever the stock market goes down significantly we may see an eventual movement in the same direction of this market, many do not like this but to me this is a transitional phase of bitcoin and there is nothing to worry as long as the development of bitcoin continues and fiat keeps losing value.

[STT]

When Dollar index is rising it means the exchange rates of most currencies are then buying less dollars per their own national units.    If countries, companies or people owe dollar, have debt or leveraged accounts in that unit then they become dramatically worse off at that point as both market and positions can move against them.     BTC as it trades and is easily exchangeable in dollars is a possible source of dollars for those who owe this debt, hence even if BTC had previously been wanted and had no problem within its own sector it will still become under pressure as a funding source of dollars.    Its not as true within the USA where of course dollar is the only currency commonly used but most countries around the world also have dollar as their reserve asset and source of liquidity when trading especially globally, so its a receding tide for economies outside the normal circulation of dollar liquidity.
   We have foreign nationals investing in US stock market and we have global usage of BTC also, you can have any currency linked to an asset price in theory but the biggest markets are for dollar pricing at present.   Hence I think the two are linked in this way, its also possible for a foreign company to owe dollars in taxes and tariffs yet have no natural source, if dollar rises and perhaps they receive less orders also their profits are impacted twice over.
 I think the explanation for carry trade in investing dictionary could help explain some dynamics better https://www.investopedia.com/terms/c/currencycarrytrade.asp

[MCobian]

In my opinion it's just a coincidence, because if we study the movement of the stock market with bitcoin is much different. Maybe that happened
in March 2020 due to the Corona virus Outbreak that caused investors to panic and make all investments go down, not just the stock market
and bitcoin only. Even gold and real estate investment when it came down too. What happened in June is also the same.