Cryptocurrencies are closely correlated with the stock market. Bitcoin, for example, has been correlated with the Nasdaq since the start of the year. One investor who recently sold ETH, the crypto token he used to crowdsource economic models, cited the correlation as his decision. Craib, who founded the Numerai hedge fund that uses crypto for crowdsourcing economic models, said he sold the tokens because they correlated with venture capital flows. the official btc evolution collects information about which coins the user has in their wallet and how much money they have spent on buying or selling bitcoins within a particular period.
Bitcoin is the most liquid of all crypto assets.
Bitcoin is the most liquid crypto asset and strongly correlates with stocks. Its price is affected by the US jobs report each month, which is widely considered the month’s most important economic data release. However, some factors specifically affect the crypto coin.
In times of risk, digital currencies typically do not have high correlations with traditional assets. However, bitcoin is sporting high correlations with stocks. While this is not necessarily bad, it should be noted that the 90-day correlation between bitcoin and the S&P 500 is the highest since October.
Investors have been hoping for a day when Bitcoin would trade independently of the stock market. However, the past couple of months has seen Bitcoin trade more like a tech stock or S&P 500. As a result, Bitcoin investors have had a heightened risk of losing money during a market downturn. However, the price of Bitcoin will eventually move back to its historic uncorrelated trend.
Its price closely mirrors that of the Nasdaq.
The price of cryptocurrencies is closely correlated with the Nasdaq. This trend has been particularly noticeable over the past four years. Charts of Bitcoin and the Nasdaq show how the two move in tandem. In December 2018, both Bitcoin and the Nasdaq fall to record lows. In June 2019, both prices soared to record highs, with both hitting record highs for the quarter.
The popularity of cryptocurrencies has led to a growing correlation between the two. In February 2020, the stock and crypto markets experienced a severe downturn due to the COVID-19 pandemic. However, both markets recovered by December 2020.
It’s a “haven” asset.
Since early this year, Bitcoin and other cryptocurrencies have been correlated to the Nasdaq. This correlation could be a result of similar sentiments in the markets. Morgan Stanley analysts have said that traditional investors have begun to shift some of their risks away from the equities market and into the cryptocurrency market.
Cryptocurrency supporters argue that the price of bitcoin acts as a hedge against inflation and a haven during stock market slumps. Despite these claims, the cost of bitcoin fell more than 60% this month and was as low as $20k in November. Similarly, the price of bitcoin’s stablecoin fell almost 40 percent, costing investors $40 billion. Several bank-like companies were forced to suspend withdrawals, which lowered the price of bitcoin.
It’s a financial asset.
The cryptocurrency market is closely tied to the Nasdaq, and the price of Bitcoin is 90% correlated with the stock market. This correlation is alarming since it signals that the crypto market is not yet fully detached from the stock market. This makes it difficult for investors to gauge how cryptocurrencies will perform in the future. It is always best to seek professional financial advice before investing in cryptocurrencies.
Bitcoin’s performance has been correlated with that of the Nasdaq since January and has approached a one-to-one correlation in the past few weeks. The correlation between the two indices is still positive, despite the recent market turbulence. Bitcoin has historically been volatile and very similar to risky tech stocks.
It could fall further if geopolitical tensions intensify.
As geopolitical tensions rise near the Ukraine border, investors are selling stocks and piling into Treasuries. They are attempting to hedge against the risks of higher oil prices, which could scupper European-mediated peace talks. Analysts believe that the market could see a brutal selloff if the conflict escalates. The overnight proclamation by Russia that military action against Ukraine will begin soon only heightened the already cautious market environment. The Nasdaq briefly plunged 20 percent below its November record high.
While geopolitical tensions can be scary, they don’t need to cause investors to panic. Stocks tend to bounce back from these selloffs and have often performed well following them. A similar selloff to this one since 2000 has historically been a buying opportunity for tech stocks. Geopolitical tensions are rarely long-lasting. Historically, stock markets have recovered from a geopolitical shock within a few weeks.
Since the beginning of the year, Bitcoin has been highly correlated to the Nasdaq, a primary stock market index. This correlation may be due to similar sentiments. According to Morgan Stanley, investors have shifted risk from the equities market to cryptocurrencies.