Bitcoin and Stocks Aren’t That Correlated
To be fair, bitcoin has suffered a bit over the last 48 hours. Despite spiking as high as $6,800 about two days ago, the currency has since taken a bit of a tumble and fallen back to roughly $6,200 at the time of writing. However, it’s still doing miles better than the Dow and the S&P, both of which have fallen heavily since yesterday morning.
The Dow, for example, has once again taken another dip below 20,000 and is inducing its worst trading period since the year 2008, the time of the fiscal crisis. Bitcoin’s ability to better withstand the bearish market conditions we’re currently facing suggests evidence that the world’s number one cryptocurrency by market cap is not correlated with stocks, an idea that many analysts have presented in the past.
It’s been noticed before that whenever stocks fall, bitcoin is likely to follow suit and vice versa. While both are struggling through present bear conditions, the cryptocurrency is much better suited for them at press time, and stocks are traditionally much slower to move up the financial ladder.
Analyst Denis Vinokourov – head of research for the digital asset firm Bequant in London – comments:
A combination of factors is driving the market higher today… While bitcoin may have been trading in lockstep with risk assets and particularly with the S&P 500, it is not the first time that the digital asset has established some degree of correlation to traditional assets. Every time, this correlation proves to be short lived. This deviation is another win for an asset that prides itself on its non-correlated and asymmetric performance.
Catherine Coley – CEO of Binance.us – commented that the recent fiscal environment is likely to boost bitcoin’s status as a “safe haven” asset over products like stocks and traditional bonds. She comments:
Last week’s nosedive in crypto markets was part of a universal rush to cash among investors in response to unprecedented panic and uncertainty, but bitcoin’s appeal as a safe haven and deflationary asset is once more apparent amid the raft of fiscal and monetary stimulus from governments and central banks around the world, reminding investors just how precarious the existing financial system really is.
Blockchain Is Stronger Than We Think
Paolo Ardoino – CTO of Bitfinex and Tether – believes that the present market conditions are proving just how strong and stable bitcoin and the crypto industry really are. He states:
The blockchain industry can and will survive through tremulous current events. The current situation shows that the global economy needs transparency and blockchain. You can’t keep printing money out of thin air and leaving our children to pick up the debt. Bitcoin is the answer.