After a very nice bull run, the Dow Jones Industrial Average has experienced a downturn in recent weeks. The correction is also happening with cryptocurrency. Could there be an association between these two investment markets?
It is important to avoid using terms like “bull or bear markets” in order to cross over into different investment spaces. This is due to the fact that cryptocurrency experienced a remarkable 2017 bull run, which saw gains exceeding 10x. By the end of 2017, you’d have more than $10,000 if $1,000 was invested in Bitcoin. The traditional stock market has never seen anything like it. In 2017, the Dow rose by approximately 23%.
I take care when looking at charts and data because it is possible to make numbers say exactly what you want. The 2018 correction was swift and similar to the 2017 crypto gains. What I am trying to convey is that we should be objective in our comparisons.
Many newcomers to cryptocurrency are stunned at the recent crash. All they heard was about how early adopters were making a lot of money and buying Lambos. This market correction was evident to more experienced traders due to the skyrocketing price over the last two month. Many digital currencies have made people overnight millionaires. It was clear that they would soon want to share some of that income.
The recent addition of Bitcoin futures trades is another factor that I believe we need to take into account. My personal belief is that there are many forces working here, led by the old guard, who want to see crypto fail. Futures trading, and the excitement around crypto ETFs, are also positive steps in making crypto mainstream and being considered a legitimate investment 바이낸스 차트.
After saying all this, I thought, “What if there is a connection?”
What if Wall Street news impacted crypto exchanges Coinbase and Binance. Could they both be affected by the same news? Or, what if the opposite happened and crypto grew as people sought out a safe place to stash their money?
To not try to skew the numbers, and to be as objective as possible I decided to wait until we had a relatively neutral playing surface. This week is as good as any because it marks a period when both markets have seen corrections.
Cryptocurrency trading is different from stock markets in that the exchanges never come to an end. Since I was a stock trader for more than 20 years, I understand the feeling of sitting on Sunday afternoons and thinking.
“I really wish that I could trade a few positions right now, as I know the price will rise significantly when the markets open.”
Walmart-like access can also lead to knee-jerk emotional reactions which can snowball in either one direction. The traditional stock market offers people the opportunity to hit the pause and then sleep on their choices overnight.
I used the previous 7 days of cryptocurrency trading data to get the equivalent of one week. The past 5 were for the DJIA.
Here is a side-by-side comparison over the past week (3-3-18 – 3-10-18). The Dow dropped 1330 points due to 20 of 30 companies that are losing money. This represented a 5.21% decrease.
Because cryptocurrencies are not technically existent, it is more difficult to compare apples to apples. However, this is changing as different groups are creating their own versions. This is the closest comparison to make at the moment.
Coinmarketcap.com reported that 20 out of the top thirty coins had fallen in the last 7 days. Are you familiar? You might be familiar with the crypto market’s size, which fell from $445 to 422 Billion to 422 Billion. Bitcoin, the gold standard counterpart, saw a 6.7% drop during the same period. The usual pattern is that as Bitcoin falls, so will altcoins.
Are you referring to coincidence or causation What is the explanation for similar results? Could there be similar causes?
While it seems like prices have fallen in a similar way, I find it surprising that the reasons behind this are quite different. As I mentioned before, numbers can be misleading so it is crucial to look at the layers.
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