The Trump Dump

[apogio]

You have a skewed view on this IMO. To begin with, the supposed correlation only exists in the short term, if you zoom out you will see that there is no such correlation. And if we go to the most recent the price of bitcoin has remained fairly stable when the stock markets have plummeted. If you think about it, as volatile as bitcoin is, it would have fallen much more if they had been correlated.

Correlation is calculated using specific data at specific times and is a mathematical equation. It's not about graphs and empirical observations.

In fact, Bitcoin and the S&P500 (US market) are astonishingly highly correlated.

I 've collected the prices on April 1st of each year from 2015 until 2025 (10 years of historical data).

The results give a 0.959484 correlation.

[d5000]

Stock market correlation seems to be a relatively new phenomenon and not be valid at all for pre-2019 dates. In particular for the 2014 and 2018 Bitcoin bear markets there is no equivalent on the US stock market, so the only reason that they seem "correlated" is that both were in a long term uptrend since 2009.

The mid- to longterm correlation is indeed astonishingly high since 2019/2020, if we take let's say 3-month intervals or more.

For shorter timeframes, there seem to be phases with high correlation and others with low correlation. The first high correlation phase started in 2020 after the COVID dip and lasted till 2021, then in 2022 there was another correlation phase and another one since late 2024. Those periods with low correlation seem to be related to Bitcoin market events like the FTX crash, although 2023 is quite an anomaly as the correlation seems to be highly erratic in this year:


Source: https://newhedge.io/bitcoin/us-equities-correlation

(Edit: image changed to reflect last recorded value, it's not an average.)

Correlation is the blue curve at the bottom.

My guess is that since 2020 investors have become more "professional" and are looking into macroeconomic data to predict Bitcoin's price chart, and thus there can be independent variables like the Fed interest rate or economic growth in major economies which affects both Bitcoin and stocks in a similar manner. I don't remember any time before 2020 when Bitcoiners were talking about Fed interest rates or the CPI for example. Okay, they were low in the 2010s but the obsession for signals from the traditional financial market is recent.

The Trump Dump is also an example for that phenomenon, although it is also true that the intensity Bitcoin reacted with this time was lower than on other occations when it generally exaggerates market moves.

[pooya87]

Correlation is calculated using specific data at specific times and is a mathematical equation. It's not about graphs and empirical observations.

Markets are too complex to be measured and analyzed using math and equations. If it were otherwise, anybody could become ultra rich writing some simple equations and an automated script that trades and generates them a massive income.

In fact, Bitcoin and the S&P500 (US market) are astonishingly highly correlated.

I honestly don't see actual correlation here, specially when we have these.
2x rise from 2015 to 2016 <=> a small drop in S&P500
a big crash from 2018 to 2019 <=> a small rise in S&P500
a big rise from 2019 to 2020 <=> a small drop in S&P500

The only correlation bitcoin has is with the global economy so when for example the 2020 pandemic damages the global economy with recession, the effects are seen in bitcoin market as well with a crash. Other markets are obviously also affected by the global economy and they also crash. But that doesn't mean just because Bitcoin and S&P500 are crashing both, there is a correlation between the two!
And that's a variable that cannot be included in the equations...

[apogio]

~

Very interesting because this graph is proving that S&P500 and Bitcoin are almost negatively correlated (-0.7), which means that when one goes up the other goes down and vice-versa.

Markets are too complex to be measured and analyzed using math and equations. If it were otherwise, anybody could become ultra rich writing some simple equations and an automated script that trades and generates them a massive income.

This is exactly the reason why some people claim that financials is not supposed to be a scientific field. I am not in favour not against this claim because I am completely irrelevant with the field. I do have a financial background but nothing to do with financials.

I honestly don't see actual correlation here, specially when we have these.
2x rise from 2015 to 2016 <=> a small drop in S&P500
a big crash from 2018 to 2019 <=> a small rise in S&P500
a big rise from 2019 to 2020 <=> a small drop in S&P500

Hmm, I think d5000 has given a much more fulproof answer than me, because it's calculated using the full dataset, whereas I used yearly prices.

Just out of curiousity I plan to make a daily-based calculation correlation calculation, to see how different it is.

But overall, you seem to be right that my estimation is notional (theoretical and perhaps wrong).

[Cryptmuster]

Trump's goals are clear, starting with the most simple and obvious, this is the manipulation of the market for the purpose of enrichment, I think this is in his favor and his entourage, and ending with the fact that he wants to achieve a decrease in the interest rate from the Fed in order to start printing a lot of money. Remember what happened during his last term, he printed just a huge amount of money, it is obvious that he considers such a decision to be correct and I do not even doubt that he will do it again, but he just needs the right conditions for this. He crashed the markets with tariffs, this is true, but I also think that he knew that his actions would lead to this, so yes, it was all planned from the very beginning.

[Free Market Capitalist]

Correlation is calculated using specific data at specific times and is a mathematical equation. It's not about graphs and empirical observations.

In fact, Bitcoin and the S&P500 (US market) are astonishingly highly correlated.

I 've collected the prices on April 1st of each year from 2015 until 2025 (10 years of historical data).

The results give a 0.959484 correlation.

Nice calculations that prove nothing. I mean the bitcoin price multiplied by 400 in that period while the S&P only like by 2.55 and they are supposed to be highly correlated?

The supposed correlations are human patterns, they do not exist, they are regularities that we project to better understand the phenomena.

I have to remind you of the classical example of people drowning in pools correlated to Nicolas Cage appearing in films.

Markets are too complex to be measured and analyzed using math and equations.

It's just like that.

[d5000]

Very interesting because this graph is proving that S&P500 and Bitcoin are almost negatively correlated (-0.7), which means that when one goes up the other goes down and vice-versa.

Ah, no, that is just casuality that my mouse pointer was at a point with negative correlation 

There were definitely such phases, but since 2020 the correlation most of the time was positive. The last value was actually 0.8462. I have changed the image of the post above to reflect that.

I honestly don't see actual correlation here, specially when we have these.
2x rise from 2015 to 2016 <=> a small drop in S&P500
a big crash from 2018 to 2019 <=> a small rise in S&P500
a big rise from 2019 to 2020 <=> a small drop in S&P500

Yes, but post-2020 there is a substantial correlation. See the graph above.

I mean the bitcoin price multiplied by 400 in that period while the S&P only like by 2.55 and they are supposed to be highly correlated?

Bitcoin generally exaggerates the S&P movements, but since 2020, it more often (not always) moves in the same direction.

I think the current situation is quite novel because there was no such exaggeration, when Bitcoin "only" lost approximately as much as the S&P 500, at least its swings are currently in the same order of magnitude.

[Finestream]

Many people now regret voting for Trump, possibly even within the crypto community, as we initially rode the hype of his promise to support Bitcoin with crypto-friendly policies. However, I believe what's happening has nothing to do with Trump. Bitcoin has always been independent especially with the stock market. What we're seeing now looks more like a market correction, leading us into a bear market, especially since we already hit an ATH earlier this year.

So just chill.  

I hate to say this but I still think that Trump’s tariffs is still one of these factors that made btc price went crashing, although the bitcoin market itself is already highly volatile in nature.

However, I also believe that Trump has also been a luck factor for bitcoin most especially when his victory was announced, but only to realized late that the policies of Trump will also bring price decline for bitcoin, which could lead to the bear season of bitcoin if the price will stay dumping in the long run.

[avp2306]

Many people now regret voting for Trump, possibly even within the crypto community, as we initially rode the hype of his promise to support Bitcoin with crypto-friendly policies. However, I believe what's happening has nothing to do with Trump. Bitcoin has always been independent especially with the stock market. What we're seeing now looks more like a market correction, leading us into a bear market, especially since we already hit an ATH earlier this year.

So just chill.  

I hate to say this but I still think that Trump’s tariffs is still one of these factors that made btc price went crashing, although the bitcoin market itself is already highly volatile in nature.

However, I also believe that Trump has also been a luck factor for bitcoin most especially when his victory was announced, but only to realized late that the policies of Trump will also bring price decline for bitcoin, which could lead to the bear season of bitcoin if the price will stay dumping in the long run.

Those situation you mentioned is temporary occurrence and I think people just go panic about the situation happen especially that they see the stock market is crashing. But actually the tariff implementation doesn't do anything with Bitcoin that's why we see the market recover and stays at $80k+ again.

Also what happened there is short term hype since many people believe that Trump could bring good changes on Bitcoin especially after he won. Yes we see Bitcoin reached at $100k but it doesn't mean everything is fine since it seems Trump is the biggest manipulator and better for people in Bitcoin also crypto to stop buying their crap so that we will not get manipulated. Also if people will settle out and ignore Trumps crazy action like this current one the tariff thing for sure they can't manipulate people anymore and Bitcoin might continue to recover.

[apogio]

Ah, no, that is just casuality that my mouse pointer was at a point with negative correlation 

There were definitely such phases, but since 2020 the correlation most of the time was positive. The last value was actually 0.8462. I have changed the image of the post above to reflect that.

I 'd be very surprised to see my calculations showing a 0.95 correlation on a yearly basis, whereas your observations show a -0.7 correlation
At least, finally we get a similar picture of the correlation between the S&P and Bitcoin.

However, I also believe that Trump has also been a luck factor for bitcoin most especially when his victory was announced, but only to realized late that the policies of Trump will also bring price decline for bitcoin, which could lead to the bear season of bitcoin if the price will stay dumping in the long run.

The stock market is full of bull runs and bear runs. If you stick to it long-term, you will most likely be winning. As far as Bitcoin is concerned, it' something new, despite the fact that it exists for 15 years now. Bitcoin is definitely volatile and is definitely driven by the general economic situation, so if you think Bitcoin is here to stay (like I do), you can expect it to behave like the stock market on the long run. I am not saying it will be identical, nor it will be similar. I am just saying that it's supposed to have bear runs and bull runs, but on the long-term it's projected to go up.

#no_financial_advice.

[goldkingcoiner]

Well, I think it's about time we call a spade a spade. Just as there was talk of the Trump pump after his election, in which there was a market rally that he boasted about, and even specifically boasted about bitcoin going over $100K, it is clear that this crash, which is on track to be like 2008 or worse, has only one culprit: Donald Trump.

So, I propose to call this dump the Trump Dump.

It is true that Trump had tariffs on his election agenda, but I think the implementation has been key to the disaster in the markets.

There is a lot at stake here, as he boasted a lot of how the stock market behaved in his first term, and there are a lot of people in the USA exposed to the markets, I speak from memory but I think it is more than half of the population. Many through pension funds.

The problem is that when you cause a market like this you don't know how it's going to end. Maybe there could be a quick recovery that may not recover for the whole legislature.

What do you think?

I think it's a dip, not a dump. And even calling it a dip is an exaggeration to me. What it really is is just a correction, which was expected. Weekly candle is still giving me the thumbs up, so I will not panic just yet.

But Trump is manipulating the markets for his own or his rich friends sake, I think. I would not put something like that past him.

[Free Market Capitalist]

I think it's a dip, not a dump. And even calling it a dip is an exaggeration to me. What it really is is just a correction, which was expected. Weekly candle is still giving me the thumbs up, so I will not panic just yet.

But Trump is manipulating the markets for his own or his rich friends sake, I think. I would not put something like that past him.

If you are referring only to the bitcoin price maybe you are right but in the OP I also talked about the stock market, since this is the Economics section in general. If we include the stock market it is clear that it has been a dump, while the bitcoin price has remained relatively stable. Further proof to me that the alleged correlation doesn't exist.

Bitcoin generally exaggerates the S&P movements, but since 2020, it more often (not always) moves in the same direction.

That's called cherry-picking in my book.

In May 2021 there was a fall in the price of bitcoin that lasted until July and had only one cause: the mining ban in China. Meanwhile, the price of the S&P 500 kept rising.

[d5000]

In May 2021 there was a fall in the price of bitcoin that lasted until July and had only one cause: the mining ban in China. Meanwhile, the price of the S&P 500 kept rising.

Picking a single event is even more cherry picking, and if you had read what I wrote above in other posts, I don't question that there are price movements which are caused by reasons internal to the Bitcoin ecosystem, which of course often lead to divergence with the stock markets.

Let's look more closely to the post-2020 movements and correlations:



In the periods marked by green circles, there is almost always a positive correlation (the zero-correlation line was "reforced" by me as it wasn't visible) between S&P 500 and Bitcoin. The red circles mark periods of significant negative correlations. The May 2021 event you mentioned is here also quite well visible. And in the rest of the periods I don't see a clear tendency.

We can see that there are long stretches of positive correlations which last several months with only very small "dips" into zero or negative correlation territory. 2023 is the only year since 2020 without a clear positive correlation.

For me, the long "correlated" stretches are very unlikely to be a coincidence. But I don't think there is a direct causality, as explained above. It's more related to independent variables like Fed interest rates, general market sentiment etc..

[virasog]

Trump's goals are clear, starting with the most simple and obvious, this is the manipulation of the market for the purpose of enrichment, I think this is in his favor and his entourage, and ending with the fact that he wants to achieve a decrease in the interest rate from the Fed in order to start printing a lot of money. Remember what happened during his last term, he printed just a huge amount of money, it is obvious that he considers such a decision to be correct and I do not even doubt that he will do it again, but he just needs the right conditions for this. He crashed the markets with tariffs, this is true, but I also think that he knew that his actions would lead to this, so yes, it was all planned from the very beginning.

Right now it is too early to say if the excessive money will be printed or not. In one hour from now, Fed Chair Powell will speak about the economy. Although there would be no announcements but his tone can be hawkish or dovish and it will determine the overall sentiments of the market in the near future. If he can hint about the interest rate cuts or maybe Quantitative easing (highly unlikely though), it can be very bullish for the markets.

Fed’s Powell Speaks at Economic Club of Chicago

[Cookdata]

I hate to say this but I still think that Trump’s tariffs is still one of these factors that made btc price went crashing, although the bitcoin market itself is already highly volatile in nature.

However, I also believe that Trump has also been a luck factor for bitcoin most especially when his victory was announced, but only to realized late that the policies of Trump will also bring price decline for bitcoin, which could lead to the bear season of bitcoin if the price will stay dumping in the long run.

Tarrif was juts an enabler, the real dump started from the very day he made some unbothered statements about Bitcoin in the Digital assets submit, that was the day many investors and bull lose some respect for him because he clearly don't care, Micheal Saylor was there and from his reactions you could tell he was disappointed because that wasn't what he expected Trump to dish out about Bitcoin, since then the market isn't as bullish as before.


The tarrif is a global war and Bitcoin isn't the only thing affected here. It's every financial market across different countries because of the personal interests and Trump was only trying to show others what they are made up of else why did he take China personal and let others slide for 90 days for negotiations. He has never like China from his first day but they are equally prepared for him as well, only one country don't suffer when there is a war, it's the two countries that suffer the consequences of their actions, US is not immune to anything.

[DubemIfedigbo001]

For the time being everything is going to continue showing red. The shock Trump gave to the US economy and the global economy as well is going to dump the markets all over the place.

Then we have big economies retaliating, specially China that is the strongest economy that is also retaliating hard against Trump tariffs by adding its own severe tariffs on anything US made. The consequences of that is going to push all these markets even lower.

Then the combination of inflation and recession that is caused by all this craziness will put its increasing sell pressure on bitcoin and push that down as well...

I see what Trump is trying to do is simply to crash all economies he sees performing better than the US and bring it to the same level with the US or even a lower level, then he can enact policies to ensure they don't outperform the US, thereby restoring a dreamy unparalleled supremacy of the US. But he is forgetting one thing, which is that other strong economies do not depend totally on trades with the US to boost their economies, same reason China, Japan and South Korea are strengthening trades between them by vowing to fast-track reaching agreements on their trilateral FTA(Free Trade Agreements) that would strengthen trades between them and unite them against the US.

[jaberwock]

It's not like bitcoin ever reacted to rest of the markets? Markets that are manipulated by Trump insider trading. You do realize that bitcoin has been following stocks more accurately with it's maturity?

Or are you saying that bitcoin price cycle is actually controlling the rest of the markets, and next BTC bear run means depression again for the stocks?
Because that's only thing i can derive from that. It's batshit crazy theory, but maybe not crazier then to think that bitcoin price works separately from rest of the markets and somehow avoids black swan events.

Timing of that price action cycle might as well been just self a self-fulfilling prophecy. And while trump shouldn't have any control the bitcoin price as it makes bitcoin seem weak, truth is that bitcoin price is very sensitive to rumors of regulations, and therefore to Trump. Only if bitcoin is removed from need of fiat money pairing and works outside of regulations, it can show true value of it. Which might not be lot, depending what state rest of the world is by then.

But hey, if the USD collapses and spirals far down enough, BTC might moon in USD and everyone is a winner.

While the markets are connected to bitcoin in most cases, there are special bitcoin situations where it goes up or down without caring about what the market is doing. Like in 2021 we had covid and all markets were down but bitcoin was up, or like in 2018 where nothing special in the world happened but altcoins peaked (and btc did on December 2017).

So we can see that there are many times when bitcoin price goes up, but there are also many cases where bitcoin price moves with the market as well, there is no guaranteed situation in either case, we just have to realize that it doesn't have to be connected 100% of the time. It is connected at some times and it is not connected at other times and we learn to live with knowing when those going to diverge from each other.

[takuma sato]

Correlation is calculated using specific data at specific times and is a mathematical equation. It's not about graphs and empirical observations.

In fact, Bitcoin and the S&P500 (US market) are astonishingly highly correlated.

I 've collected the prices on April 1st of each year from 2015 until 2025 (10 years of historical data).

The results give a 0.959484 correlation.

Nice calculations that prove nothing. I mean the bitcoin price multiplied by 400 in that period while the S&P only like by 2.55 and they are supposed to be highly correlated?

The supposed correlations are human patterns, they do not exist, they are regularities that we project to better understand the phenomena.

I have to remind you of the classical example of people drowning in pools correlated to Nicolas Cage appearing in films.

Markets are too complex to be measured and analyzed using math and equations.

It's just like that.

Correlation just means they move in tandem in the same direction, not necessarily at the same rate. The base multiplier for BTC is much lower because the BTC marketcap is much lower and so it requires less money to move than the SP500. If you sum all the 500 businesses in the SP500 you get around $44 trillion, so that is of course a giant much slower to move. The point here is that it moves in the same direction, is just that BTC moves at faster speed, it is higher beta to SP500 of just more volatility, like a leveraged ETF if you want to make the comparative. And so far charts prove that BTC is not acting as gold. However it may start acting as gold at any time, these things are not planned ahead, they just happen due market consensus, and maybe we could see the SP500 crash while the BTC performs well and those that sell miss this move.

[Cookdata]

While the markets are connected to bitcoin in most cases, there are special bitcoin situations where it goes up or down without caring about what the market is doing. Like in 2021 we had covid and all markets were down but bitcoin was up, or like in 2018 where nothing special in the world happened but altcoins peaked (and btc did on December 2017).

So we can see that there are many times when bitcoin price goes up, but there are also many cases where bitcoin price moves with the market as well, there is no guaranteed situation in either case, we just have to realize that it doesn't have to be connected 100% of the time. It is connected at some times and it is not connected at other times and we learn to live with knowing when those going to diverge from each other.

If I remember correctly, we were supposed to have halving in 2020, month of May 20th and then Corona came early In January- February, so that tanks the prices together with stocks. However, Bitcoin was recovering with the rest of stocks but when halving came, Bitcoin has to free itself from the rest of the traditional stock and did his thing with a bull run that ran to 2021 before the Luna craze ended everything for the whole crypto market, bad experience I wouldn't forget with altcoins.

Now, the situation of the market is totally different from what we are having. Bitcoin can be a stand alone asset regardless of what economy is saying if this was in the past but as of today, there is hefty numbers of institutional investors that are having more than half liquidity of the Bitcoin market and if there is any bad news around the traditional market and they decide to take away their money from there, they will take away from Bitcoin too and it's going to be affected.

[Minor Miner]

While the markets are connected to bitcoin in most cases, there are special bitcoin situations where it goes up or down without caring about what the market is doing. Like in 2021 we had covid and all markets were down but bitcoin was up, or like in 2018 where nothing special in the world happened but altcoins peaked (and btc did on December 2017).

So we can see that there are many times when bitcoin price goes up, but there are also many cases where bitcoin price moves with the market as well, there is no guaranteed situation in either case, we just have to realize that it doesn't have to be connected 100% of the time. It is connected at some times and it is not connected at other times and we learn to live with knowing when those going to diverge from each other.

In 2017-2018, the stock market also grew thanks to the Fed's loose monetary policy and a fairly positive macroeconomic situation. Meanwhile, the growth of bitcoin and crypto is due to the crypto craze and not dependent on the economy. So, it would not be wrong to say that there was no strong correlation between these two markets at that time.

Likewise, not just bitcoin but the entire stock market was dumped when the pandemic hit. But after the government decided to pump money to save the economy, stocks also recovered and grew, not just bitcoin. The only difference between them is that bitcoin and crypto always have faster and bigger growth rates. So it can be said that during the covid pandemic, both markets were quite closely correlated as both fell when the pandemic hit and both rose when the government pumped money into the economy.

In my opinion, this correlation will become clearer and tighter as governments decide to intervene more deeply in the crypto market with regulations and legal frameworks.