Bitcoin has now fallen below $30,000, but is still up 2% for the year. This follows one of the worst days on the stock market in recent history. Stocks were back up over 600 points today as of 2:45 p.m. Any correlation between stocks and crypto is most likely related to the perception that the global economic recovery is slowing down. People are selling and planning to wait and see what happens. However, the stock market’s rebound today points to the fact that most people are not too worried. While a correction in stocks may be inevitable, it will be interesting to see if cryptocurrency, which has already had a major correction this year, will follow; or, if people leaving stocks will decide to invest in a crypto market at bargain prices.
While analysts study trends with cryptocurrency, one thing that we do not have that stock analysts can look to, is really long-term historical data. The U.S. stock market can trace its roots to the late 1700’s. When you have hundreds of years of data, you can gain quite a perspective on long-term trends. While Bitcoin and other cryptocurrencies are building a longer history, we are still really learning what bull runs, bear runs, and corrections look like in the world of crypto. Perhaps as we move forward, we will see trends that begin to look more like stock trends. We may even see the patterns begin to parallel each other in response to world economic news and events. However, for now at least, it seems that crypto will be more volatile overall than a stock market largely driven by blue chip stocks and index funds.
Historically, any correlation between Bitcoin and stocks has appeared weak. However, with crypto becoming more mainstream, it is possible that we are beginning to see this change.
It seems that we may be in a position building phase of crypto. A CPA friend of mine was telling me the other night that Bitcoin is in a sideways phase, not a bear market. He said that this is typically a good time to buy when we see something like this in stocks. He is buying crypto right now. Whatever the case, it seems that hodling for the long-term and accumulating more crypto will be my strategy. What do you all think?
As always, buy, sell, and trade and your own risk. I recommend free faucets that pay if you have some spare time.