If Bitcoin is safe-haven, why mirror the price movement of the U.S stocks?

[cryptoboy007]

Over this week I got thinking about the correlation of Bitcoin and the U.S stocks, and the purported claims of Bitcoin being digital gold and therefore a safe-haven. I could only conclude that all these claims contradict the true nature of Bitcoin. Maybe it will be safe to think that those who assume Bitcoin to be safe-haven are only been extreme in their support for the digital asset or attempting to shill their bag. Whichever be the case, Bitcoin is Bitcoin for what it is, a noble digital asset.

On the flip side, the commodities market has a negative correlation with stock. I am beginning to think that a cryptocurrency that tracks the price performance of the top 10 commodities by market cap will best serve as a price hedge against stocks. Just like the S&P 500 is a standalone trading asset that tracks the top 500 U.S stocks, why can't we have such in crypto to track the performance of the top 10 traditional commodities? I am trying so much not to divert the focus from Bitcoin, but look at it, this will give a lot of colors to the crypto trading market.

We will have an asset that doesn't necessarily plunge whenever Bitcoin price tanks, compared to what we are seeing in altcoins that bleed the hell out of them whenever Bitcoin makes a little downward movement. 

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[fiulpro]

Over this week I got thinking about the correlation of Bitcoin and the U.S stocks, and the purported claims of Bitcoin being digital gold and therefore a safe-haven. I could only conclude that all these claims contradict the true nature of Bitcoin. Maybe it will be safe to think that those who assume Bitcoin to be safe-haven are only been extreme in their support for the digital asset or attempting to shill their bag. Whichever be the case, Bitcoin is Bitcoin for what it is, a noble digital asset.

On the flip side, the commodities market has a negative correlation with stock. I am beginning to think that a cryptocurrency that tracks the price performance of the top 10 commodities by market cap will best serve as a price hedge against stocks. Just like the S&P 500 is a standalone trading asset that tracks the top 500 U.S stocks, why can't we have such in crypto to track the performance of the top 10 traditional commodities? I am trying so much not to divert the focus from Bitcoin, but look at it, this will give a lot of colors to the crypto trading market.

We will have an asset that doesn't necessarily plunge whenever Bitcoin price tanks, compared to what we are seeing in altcoins that bleed the hell out of them whenever Bitcoin makes a little downward movement. 

Stocks are centralized and Bitcoins is non centralized investments , even though they might serve the same purpose their correlation is not established with 100% certainty.



This is a graph for back in 2019 , as we can see here , stock , Bitcoins , gold , they are very important but at the same time they don't mirror the movement of each other .

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BTC and ETH on the other hand are an asset that mirror the movement of each other strongly.


{Images directly taken from google}
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I do think what you are saying might be a problem , since mixing the centralized market with the non centralized one and that too the commodity market will not only be weird , it would also be unnecessary .

I really don't get the whole idea , you might try and maybe represent it more using a graph ? 

[joniboini]

Graph aside, price movement are an indicator of market sentiment. If an asset is not deemed as a 'safe-haven' or whatever they call it, then the price will move accordingly. In short, if more and more people starts to believe that bitcoin (or any asset) is a good thing to store their wealth, sooner or later the price will follow. It's safe to say that if we don't see that yet, then the market still don't fully trust it even if the potential is there. Time will tell.

[scottt0m]

We cannot make a comparison between cryptocurrency market, gold and stocks. Each market has characteristics and standards that differ from the other market and many of these markets have many advantages and disadvantages.
It is an alternative for those who do not want to invest in gold or are afraid of stock market in the long run.
Bitcoin has proven to be a better asset to hold for several years than yielding gold and stocks.
Altcoin fail a lot.

[mindrust]

We cannot make a comparison between cryptocurrency market, gold and stocks.

Not really.

You can compare any financial asset to any other financial asset. You can even compare rice prices to gold prices too if you want to see which one was the smarter and more profitable investment last year.

Since crypto, gold and stocks are all financial assets, you can definitely make comparisons between them.

I don't know if there is a correlation between crypto and stocks, nobody really can. We can only speculate.

Even if there was once, it doesn't mean it was permanent.

Maybe gold/crypto pair was correlated for a while because some whales thought crypto was similar to gold but then they changed their mind and started to trade crypto like stocks?

That's possible too.

[BrewMaster]

bitcoin doesn't mirror anything least of all US stock market!
it has always been like this, bitcoin is unique and because of that it has never goes with or against movement of another market ever. the false assumption mainly started after the COVID-19 pandemic and only because bitcoin went down while others were also going down. but that is more of a coincidence than a correlation.

that is historically speaking. but also logically, there is absolutely no reason why bitcoin should follow any other market either. of course there are incidents that can affect everything like the pandemic i mentioned and affect every aspects of our lives that includes bitcoin market.

think of it this way, if it rains and both your yard and your neighbors yard get wet you can't say your neighbor's yard is following your yard and should also get wet each time you water your plants! the "rain" was a cause that affected both. other causes such as watering your plants (stock market growth, stock market crashing,...) has no effects on the other yard (ie. bitcoin market).

[kryptqnick]

Over this week I got thinking about the correlation of Bitcoin and the U.S stocks, and the purported claims of Bitcoin being digital gold and therefore a safe-haven. I could only conclude that all these claims contradict the true nature of Bitcoin. Maybe it will be safe to think that those who assume Bitcoin to be safe-haven are only been extreme in their support for the digital asset or attempting to shill their bag. Whichever be the case, Bitcoin is Bitcoin for what it is, a noble digital asset.

On the flip side, the commodities market has a negative correlation with stock. I am beginning to think that a cryptocurrency that tracks the price performance of the top 10 commodities by market cap will best serve as a price hedge against stocks. Just like the S&P 500 is a standalone trading asset that tracks the top 500 U.S stocks, why can't we have such in crypto to track the performance of the top 10 traditional commodities? I am trying so much not to divert the focus from Bitcoin, but look at it, this will give a lot of colors to the crypto trading market.

We will have an asset that doesn't necessarily plunge whenever Bitcoin price tanks, compared to what we are seeing in altcoins that bleed the hell out of them whenever Bitcoin makes a little downward movement. 

Many people who are into Bitcoin don't care if it's a safe haven or not. Long-term investors are interested in high returns, not high stability. Traders care about regular fluctuations, so whether it's safe to hold money in Bitcoin is of no concern to them.
More importantly, I agree with BrewMaster and don't think Bitcoin is mirroring the stock price movement. If we look at S&P price chart, the price was steadily albeit slowly increasing from November 2019 till February 2020. Bitcoin, on the other hand, experienced a solid drop in December and was recovering throughout January. While there are some similarities in spring 2020 and December 2018, there's definitely no mirroring.

[Darker45]

The claim that Bitcoin is a safe-haven is almost as dubious as the claim that Bitcoin's price movement is in direct correlation to the US stock market's movement. However, if Bitcoin's non-correlation to the S&P 500 is proven true, then it could indeed be treated as a safe option whenever the general sentiment of the traditional market is bearish. At the very least, shifting to Bitcoin could provide you an opposite result.

There may be times when the movements of both markets are parallel but these movements are temporary and do not form a pattern, especially in a relatively longer period of time. Which means to say that Bitcoin could indeed be an independent market.

Here's a Forbes article written a few months ago on Bitcoin being more or less an independent market.

“Bitcoin is definitely a non-correlated asset,” Pompliano told CNBC in a December 2018 interview. “If you look at the correlation between the digital asset and the S&P 500 over the last 180 days, it’s at zero,” he noted. “If you look at it compared to the dollar index, it’s near zero,” he added.

As of a January 2020 interview with Cointelegraph, Pompliano said his position on the matter had not changed. “The most important part of bitcoin, when it comes to the global hedge, is the fact that it’s a non-correlated asset — meaning that, as stocks go up or down, bitcoin doesn’t have correlation to that,” he told the media outlet.

[20kevin20]

This has been under debate ever since Bitcoin's existence.

Just give it time and it'll tell you 100% whether it's a safe haven asset or not. It truly and completely depends on you as a Bitcoin holder whether you consider it yourself one or not as well. One of the ways we influence price is through buying & selling, right?

If enough people considered it's the perfect safe haven asset, they'd make moves on the market accordingly and Bitcoin would then become a trusted financial asset for difficult times. If enough people think the opposite, it'd not be a safe haven. In time, things will be decided. When hard times come, it's much easier and safer to sell your Bitcoins and buy Gold if you want stability and a 100% safe haven asset. Bitcoin is still a question mark and it's too big of a mark not to be worried in difficult times about its potential and future.

Then you have regulations, which vary widely from one country to another and is under constant change. Gold has a VERY long history of regulations and chances are less to be surprised (negatively) by some new Gold regulations vs by some crypto ones. And then consider volatility - during a difficult time such as a pandemic, what would you rather do:
 1. Sell your entire stocks portfolio and buy Gold
 2. Sell your entire stocks portfolio and buy Bitcoin
 3. Sell your entire stocks portfolio and buy 1/2 Gold, 1/2 Bitcoin

I think I can assure you that no. 1 would be the dominating answer. During such times you want to hold a portfolio that's today valued at $100k and will be $90-110k in the distant future as well, not one that is worth $100k today and might be worth $15k next month.

[concept2]

Its really silly to compare a centralized market with a decentralized market. Moreover, every asset is a unique variable to the market and anyone in this world is a unique person who can choose whichever kind of investment. And any kind of investment has a chance to give the profit to you. Since the development in technologies and internet, everyone right now have a chance to interact with any kind of trading, brokers and stocks. Why would people put their money in bitcoin if they see a more potential stock which can give them a great amount of money in a short time ? They will quickly withdraw their money, deposit it to a stock market and buy some shares with a few buttons

[cryptoboy007]

Graph aside, price movement are an indicator of market sentiment. If an asset is not deemed as a 'safe-haven' or whatever they call it, then the price will move accordingly. In short, if more and more people starts to believe that bitcoin (or any asset) is a good thing to store their wealth, sooner or later the price will follow. It's safe to say that if we don't see that yet, then the market still don't fully trust it even if the potential is there. Time will tell.

Intelligent comment tbh. This further proves that Bitcoin is more of a speculative risk asset than being a safe-haven. On the flip side, gold has stood the test of time and has a proven use-case and high demand across industries which makes people value it year in, year out.

[pixie85]

It isn't a sfe haven as long as both Bitcoin and stocks are mainly bought and measured in USD value. We could see that when Trump closed borders in fear of covid both stocks and cryptocurrencies decreased in price and Bitcoin still did well compared to stocks.

Bitcoin stopped by itself and stocks had to be stopped by a Wall Street trading pause.

[jostorres]

I think all those things are quite unnecessary. Assets can't be a safe haven all the time. There are times that cash can be a better option as a safe haven, and sometimes gold is a good option to go with. There are times you will check and a particular asset will be doing fine while the majority in the market are falling. You can decide to buy that particular asset so you will be able to save your money and not lose it.

So in this case of cryptocurrency/bitcoin, I don't think it's necessary creating what you have referred to as S&P 500. Cryptocurrency is different, and it doesn't correlate with stocks just as you have said, sometimes when it does it's just a coincidence. They don't correlate in any way, neither does it correlate with gold. The only thing bitcoin correlates with its same cryptocurrencies such as Ethereum.

[dothebeats]

I'm pretty sure they are just mere coincidence, as it is not only people invested in US stocks are in the bitcoin market, and not even the majority of huge bitcoin movements came from the West itself. Anyway, you have a point that people may just be shilling their bags by stating that bitcoin is a safe-haven, as we obviously have seen some massive crashes of bitcoin where it is least expected and where people believe that it is still capable of making a push. It is too early to claim that bitcoin is a safe-haven, at is still susceptible to heavy market swings and flash crashes, and it is also difficult to tell that it's not given that it sometimes move in a different direction when some traditional assets are falling down, just like what we saw these past few months.

[hatshepsut93]

Bitcoin is not and never was a safe haven, a safe haven is something that has very high chance of preserving its value during a crisis, or at worst only loses at little bit of value. Bitcoin goes randomly up or down by a few percents almost every day, and it swing by tens of percents many times per year. This already disqualifies it from being a safe haven, just like no one ever considers penny stocks to be a saf haven, but now that Bitcoin followed stocks at the beginning of the covid-19 crisis, investors have even less reasons to view it as a safe haven. It might take decades before Bitcoin will start showing these properties.

[DoublerHunter]

Bitcoin is not and never was a safe haven, a safe haven is something that has very high chance of preserving its value during a crisis, or at worst only loses at little bit of value. Bitcoin goes randomly up or down by a few percents almost every day, and it swing by tens of percents many times per year. This already disqualifies it from being a safe haven, just like no one ever considers penny stocks to be a saf haven, but now that Bitcoin followed stocks at the beginning of the covid-19 crisis, investors have even less reasons to view it as a safe haven. It might take decades before Bitcoin will start showing these properties.

^ Definitely right, this is not safe haven as investment purposes but when it comes safety purposes against thieves, bitcoin probably consider as a safe haven. At the price stability, bitcoin will not consider as a safe haven and bitcoin do not have any mirror in any form of investment because this has its own demand and supply which makes becomes a valuable asset or currency. So, I don't see any correlation of bitcoin price movement even when pandemic hits the world bitcoin price remain calm.

[gentlemand]

We cannot make a comparison between cryptocurrency market, gold and stocks.

All markets are filled with people. Most of them are filled with the same people. It stands to reason that their behaviour will be pretty consistent across all of them.

Anyone who says it's a safe haven is a silly sausage. It's still deep in the wild bet phase.

[goaldigger]

We cannot make a comparison between cryptocurrency market, gold and stocks.

All markets are filled with people. Most of them are filled with the same people. It stands to reason that their behaviour will be pretty consistent across all of them.

Anyone who says it's a safe haven is a silly sausage. It's still deep in the wild bet phase.

We all have the same rules to follow, in trading or by way of investing, is just that the news and the current performance of a market makes the difference.

If we’re going to treat bitcoin as the safe haven then so be it, its your choice to believe on that but as I can see on the charts and other markets, bitcoin is still depending on stock trend and economic situation, no proven theory as the safe haven at all.

[famososMuertos]

There is a tendency to make comparisons and then try to adapt, it is something very similar to the flag that some followers of bitcoin carry for adoption, in the sense that the old establishment adopts and consequently accepts bitcoin.

In reality, bitcoin is an innovative system that "aims" at a change not only in economic terms, but also in behavior on the part of users and traditional institutions, represented in private banking and in governments that dictate rules based on protection. and benefit of private institutions.

Bitcoin must be able to create its own standards, being the benchmark of the crypto world is its first "bureaucratic" function, what it is doing, the other currencies that exist are based on the bitcoin standard, its price, volume, number of users and the main thing is the genesis of what exists.

If the above works, it is the main thing, the other standards that arise depend on your ability to pay to generate influence and then start creating indices according to the market where have the most influence, but that is far from happening in the short term.

[LogitechMouse]

Many are saying that Bitcoin is mirroring the price movement of Stock Market and at the same time Bitcoin is a safe haven.

We know already that the price of Bitcoin is driven by its investors. If there is a bad news that is happening that may affect the price of it then it will plummet. Within the past months we saw Bitcoin and at the same time US stocks go down because of the pandemic but after that, Bitcoin went up higher compare to Stocks. This is just a proof that it isn't mirroring the price movement of Stocks because if it is then Bitcoin's price mustn't be at the $9k level right now.

Its just a mere coincidence for me since we know Bitcoin is a decentralized asset/currency.