why does BTC price appear to follow the performance of US equities markets?

[Robert518]

If bitcoin is genuinely global, why does its price appear to follow the performance of US equities markets?

Bitcoin is an asset type that is unrelated to US stocks. This indicates that it is sometimes neutral, sometimes negatively correlated, and sometimes favourably correlated. Those who argue different are just cherry-picking statistics from bitcoin's price history.

One explanation for this is that the Bitcoin market cycles are significantly influenced by four-year halving occurrences that have nothing to do with the stock market.

The same individuals that run the stock market also control the cryptocurrency market. People with money and power decide where the prices of asset classes go. Crypto is merely another means of transferring wealth. That has always been the case and will continue to be the case.

What are your thoughts?

[spectre71]

My opinion / observation

It's seems to be treated like / follows FAANG facebook, apple amazon netflix google.

I suspect it's the same people who invest in stocks also do so BTC and so in step.

Zoom out 3 5 10 years and then it looks different.

So sold most of my btc knowing the market still has some crashing to do and buy back in when it's lower.

More afraid of Musk tweets than manipulation.

[NeuroticFish]

If bitcoin is genuinely global, why does its price appear to follow the performance of US equities markets?

Bitcoin is an asset type that is unrelated to US stocks. This indicates that it is sometimes neutral, sometimes negatively correlated, and sometimes favourably correlated. Those who argue different are just cherry-picking statistics from bitcoin's price history.

As you said, finding some short-timed correlations doesn't mean anything. Zoom to see the prices for many years in the past - at very least 5-6. They are not correlated.
But... especially lately, there are moments the investors (in many cases same investors in stocks and bitcoin too!) will buy in - both stocks and bitcoin - and sometimes liquidate all (or most of) the investments. This can sometimes give the impression of correlation. While this doesn't happen much yet, I don't rule out this will happen more and more often in the future.

[ultrloa]

People always keep looking at the value that's why many people got afraid and dump when there's something wrong happen to US equities. Also some of it use that incident to fud people that's why it creates short term bearish scenario that's why we need to prepare to catch some dumps and take our position since this is somehow good times to buy while many are afraid.

[mk4]

BTC mostly follows the movements of tech stocks simply because the markets sees BTC as a risk-on asset(like most tech stocks), despite BTC fundamentally being a risk-off asset(or at least it should on paper, or at least it was designed to be). It will take time for BTC to "decouple"; when and if people finally see it's value and importance.

[OgNasty]

Bitcoin is a speculative asset and in times of risk adverse investing it will suffer as a result. It will decouple when the dust settles, but in the short term you can usually expect it to mirror risky securities. Especially during periods of flight to safety among investors in global markets.

[Poker Player]

BTC mostly follows the movements of tech stocks simply because the markets sees BTC as a risk-on asset(like most tech stocks), despite BTC fundamentally being a risk-off asset(or at least it should on paper, or at least it was designed to be). It will take time for BTC to "decouple"; when and if people finally see it's value and importance.

I agree with this analysis but only for the short term. There are long term events where the correlation breaks down. For example the halvings.

It is normal that in the short term, as there are many investors investing in Bitcoin and other assets, there is some correlation. Besides that there are macroeconomic events that influence both, such as monetary policy of central banks.

But in the long term there has been and is likely to continue to be a decoupling, favorable for Bitcoin.

[Baofeng]

You got your answers already its global, meaning everyone is investing on it, including those who have invested on tech stocks, oil or even gold. So it's the constant flow of money, so when one market somewhat had a dump and sold off, the same investors will do the same with crypto and that's why there are still some sort of correlation. Although there could be time that crypto has decoupled, nevertheless through its young infancy, we cant' discount the fact that some correlations can't be denied and so it follow the performance of other traditional markets.

[mk4]

I agree with this analysis but only for the short term. There are long term events where the correlation breaks down. For example the halvings.

It is normal that in the short term, as there are many investors investing in Bitcoin and other assets, there is some correlation. Besides that there are macroeconomic events that influence both, such as monetary policy of central banks.

But in the long term there has been and is likely to continue to be a decoupling, favorable for Bitcoin.

Yeap, it's definitely for the long term. The only question is, how 'long'? I'd say it could happen at a minimum of 2 years, up to potentially 20+ years. Time will tell.

[adaseb]

Alot of people assumed that since Bitcoin was created during the 2008 market crash. That if there was another market crash it would do the opposite, since it would be a safe haven and supply being capped. However when the covid crash happened the opposite was true.

Now it has very close correlation with stocks, especially Nasdaq. Sometimes you can watch the nasdaq and if there is a quick move, you can copy the move and bitcoin will also move in a few seconds later. Its just the way it is. It trades as a risk on asset like a stock.

Who knows? Maybe one day there will be some form of decoupling.

[Welsh]

Alot of people assumed that since Bitcoin was created during the 2008 market crash. That if there was another market crash it would do the opposite, since it would be a safe haven and supply being capped. However when the covid crash happened the opposite was true.

What do you mean by this? We can't really compare since it was created after the 2008/2009 crash, and therefore there wasn't much movement in Bitcoin, at least that could be reliably correlated with the crash, since it was a new currency, and there was a whole lot of factors to consider.

As for this recession, I honestly thought Covid would make it dive quite severely, but it held quite strong for a while. However, that doesn't mean Bitcoin is recession proof, since we're now feeling the effects of a recession. Usually, the initial declaration of a recession is usually when things start taking a hit, even though the signs have been there for a while, and then a few months after when all the rates have been adjusted, and therefore people are feeling the pinch that's when you see the true effects, but again it can't be accurately correlated, there's a lot of speculation, and assumption to be made.

Ultimately, Bitcoin is, and probably will be effected by this recession for a while. I'd be pretty confident to say the next six months will either see a downward trend overall or bouncing back, and forth a few k.