A common Thesis in the crypto-space is that Bitcoin traces the course of development of the stock market.
In June, a team of Analysts of the Wall Street Bank JP Morgan was convinced that “crypto currencies since the Crash in March, more like risk assets such as equities were traded – a significant change compared to the last few years”.
This correlation has also been observed by some of the Bitcoin bulls. Digital Asset Manager Charles Edwards has published a graph showing that BTC is in the case of high volatility in the stock parallel to these traded.
Graph of the price development of BTC, together with the S&P 500 by Charles Edwards, a digital asset Manager. Graph of TradingView.com
Unfortunately for the Bitcoin bulls has been issued by the Nasdaq-100 Index is just a Signal that was last seen at the peak of the Dotcom bubble. This is due to the fact that the mood on the stock market in the Wake of the ongoing pandemic has become increasingly bearish.
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Nasdaq-highlight – Bitcoins bull trend signaled in danger
According to financial research firm sentimen trader of the Nasdaq-100 Index has printed just exactly the Signal you saw when the dot-com Boom in the year 2000 ended:
“The Nasdaq 100 rebounded intraday to more than 2% and reached an all-time high, then he turned around and closed more than 1%. He did it twice. Today was that Time. The 7. In March 2000, the other one was.“
Graph from sentimen trader on Twitter
The expectations of a market reversal in the stock market that is in spite of the pandemic and recession in the vicinity of/on all-time highs, is confirmed. The prominent economist A. Gary Shilling said in a recent Interview with CNBC the following:
“Share [behave] is very similar to the recovery in the year 1929, where the absolute Conviction is that the Virus will be under control and that the massive monetary and fiscal stimulus will revive the economy.”
This was picked up by investors such as Jeremy Grantham and Scott Minerd. The former, a Trader in the stock market, has called in the last decades, three Markttops is. And the second is the global CIO of a Wall Street giant that runs out now that the stock may go to 50%.
All of this is important for Bitcoin because of the stock market should fall from here, the crypto market is likely.
Advantages of the correlation
Since Bitcoin fluctuates with this correlation of the price level to price level, some believe this would reduce the investment opportunities of BTC. Some executives from Goldman Sachs believe that crypto-currencies make little sense, because they have unnatural and inconsistent correlations.
Qiao Wang, former product head of Messari, says about the correlation between the stock market and Bitcoin:
“The stock-crypto-correlation is the most annoying in a Portfolio-PoV. It reduces the marginal Benefit of share ownership. Maybe you should repel shares and only Gold+BTC and hold.“
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He added that in a world with extremely high Inflation, Bitcoin is probably a better cut than shares, the investment case is only strengthened.
However, it remains to be seen how many investors will be based on this Thesis.