Contradicting The Belief Of Bitcoin’s Correlation With Traditional Market

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Priyanka Kulkarni
Priyanka Kulkarni, post-graduated in Business Administration holds worthy experience in market research and investment banking. She is passionate to flaunt her perception towards cryptocurrencies.
  • People who are thinking of investing in the market should be prepared to lose their complete investment as the government, or centralized companies are helpless to control the digital asset, the price of Bitcoin must decide its way despite other currencies and markets.
  • There is no concrete statement to prove these rumors, Bitcoin’s correlations depend upon the situation of the market, which is always fluctuating.
  • As per the statistics, the historical price data between 2018 and 2019 from the S&P 500 and bitcoin, describing unconvincing data for any steady development.

Investments in digital currencies or token are quite risky, and the market is moreover not under control. People who are thinking of investing in the market should be prepared to lose their complete investment as the government or centralized companies are helpless to control the digital asset. The price of bitcoin must decide its way despite other currencies and markets.

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Bitcoin’s correlations depend upon the market situation

This prime crypto-coin has received several statements signifying connections with traditional markets such as stocks, “safe-haven” investments like gold. It even alleged with the arguments that it is not correlated to anything.

However, there is no concrete statement to prove these rumors, Bitcoin’s correlations depend upon the situation of the market, which is always fluctuating. Many speculators have a variety of thoughts on this issue.

An analyst and trader, Tone Vays, stated in a report that bitcoin does not correlate with the traditional stock market as both of them are private assets. Further, he added Bitcoin was mounted for ten years bull market as people were usually getting wealthier and were keen to invest in some good assets like bitcoin.

Vays believes a positive behavior of bitcoin during unstable economic situations, for example, regress from US-EURO zones. He said that people are prospecting for investment opportunities.

Moreover, the current scenario is different as per Vays. When it comes to major situations like the investors are facing markets crashing currently, and are concerned about their employment, they will deny speculating on bitcoin.

For roughly 11 years of span in the digital market as an asset, the bitcoin is not fully prepared to replace cash globally, the analyst notified.

The COVID-19 pandemic and oil trade wars are some of the major reasons for the fluctuating digital market. A common barometer for market health, The Dow Jones Industrial Average (DJI) dropped 20% more than its peak on March 11, 2020, and continuing to sink.

The same situation is going on with Bitcoin around the same period between $10,500 on February 12, drop to $3,870 by March 13.

The statistical overview of Bitcoin

As per the statistics, the historical price data between 2018 and 2019 from the S&P 500 and bitcoin, describing unconvincing data for any steady development.

When the S&P 500 was at its peak, bitcoin reacted just oppositely. Comparatively, other days, the duo shows their synchronization.

Anthony Pompliano, the Co-founder of Morgan Creek Digital and a crypto enthusiast, illustrated the comparative action of bitcoin in a recent tweet. He said bitcoin is flat and the stock market is dropped double digits, don’t go with the rumors saying bitcoin is correlated. The fact is the correlation doesn’t matter for a short period. Over months and years, Bitcoin remains a non-correlated asset.

However, bitcoin will achieve its gratitude with time. The asset may develop a more predictable correlation to the traditional market or lack to correlate with the world’s events.

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