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Cryptocurrency also is undergoing a correction. Can there be a correlation between both investment worlds?
We have to be cautious using vague terms such as"bull and bear markets" when crossing into every investment space. The most important reason behind this is that cryptocurrency over the course of its amazing 2017"bull run" saw gains of well over 10x. If you put $1,000 to Bitcoin in the beginning of 2017 you would have made well over $10,000 by the end of the year. Conventional stock investing hasn't experienced anything like that. In 2017 the Dow increased roughly 23%.
I'm very careful when reviewing data and charts because I realize that you can make the numbers say what you would like them to convey. Just as crypto saw enormous profits in 2017, 2018 has witnessed an equally speedy correction. The point I'm attempting to make is that we need to attempt to be objective in our comparisons.
Many which are new to this cryptocurrency camp are astonished at the recent crash. All they have heard was how all these early adopters were becoming wealthy and buying Lambos. To more experienced traders, this market correction has been pretty obvious due to the skyrocketing costs within the previous two months. Many digital monies recently made many people overnight millionaires. It was obvious that sooner or later they would want to take a number of that profit off the table.
Another factor I believe we really need to take into account is the recent inclusion of Bitcoin futures . Personally, I think that there are major forces at work here led by the old guard that want to see crypto neglect. I also see futures trading as well as the excitement around crypto ETFs as positive steps toward creating crypto mainstream and considered a"real" investment.
What if bad news on Wall Street impacted crypto exchanges like Coinbase and Binance? Could it cause them both to fall on the same day? Or imagine if the reverse were true and it induced crypto to increase as people were looking for another place to park their money?
In the spirit of not attempting to skew the amounts and to stay as objective as possible, I needed to wait until we saw a comparatively neutral playing field. This week is about as good as any because it signifies a time period when both markets saw corrections.
For those not knowledgeable about cryptocurrency trading, unlike the stock market, the exchanges never close. I have traded stocks for over 20 Decades and know all too well that feeling where you're sitting on a lazy Sunday afternoon believing,
This Walmart-like availability may also contribute to knee-jerk emotional reactions which may snowball in either way. Together with the standard stock exchange individuals have a chance to hit the pause button and sleep on their conclusions overnight.
To get the equivalent of a one week cycle, I required the past 7 days of crypto trading information and the previous 5 for the DJIA.
Here is a side by side comparison within the past week (3-3-18 to 3-10-18). The Dow (because of 20 of the 30 companies that it is made up of losing money) decreased 1330 points that represented a 5.21% decrease.
For cryptocurrencies finding an apples to apples comparison is a little different because a Dow doesn't technically exist. That is changing though as many groups are creating their own version of this. The nearest comparison now is to use the best 30 cryptocurrencies concerning total market cap dimensions.
Sound familiar? When you look at the entire crypto market, the size fell from $445 billion to 422 billion. Bitcoin, viewed as the gold standard equivalent, watched a 6.7% decrease during the exact same time frame. Commonly as goes Bitcoin so go the altcoins.
What's that we saw nearly similar outcomes? Were there similar reasons ?
While the fall in prices appears to be similar, I find it interesting that the reasons for this are vastly different. I told you before that amounts could be faked so that we really must pull back the layers.