- Many experts believe that due to the nascency of the cryptocurrency market, micro-economic factors are able to drive “volatility within the industry”.
- As Bitcoin’s market dominance continues to rise, it is expected that the economic uncertainty associated with various crypto assets will fall to a large degree.
Our readers may be aware of the fact that stock markets all across the globe have been facing a lot of bearish pressure over the course of the past few weeks. However, despite all this, Bitcoin has continued its strong financial ascent — with the flagship cryptocoin recently breaking past its all-important $8K resistance barrier
To elaborate further on the matter, we can see that following the breakdown of United States’ trade talks with China a few days back, the nation’s stock market recorded its steepest decline on the S&P 500 since January 2019.
The Inverse Correlation Formation
Statistical data available online shows us that the price of BTC is currently exhibiting an “inverse correlation” with the stock market at large. As a result of this, many traders are actively avoiding financial disasters by weaning their investments away from falling assets into ones that are actively surging (such as Bitcoin, Ether, etc.).
Additionally, it is also worth pointing out that during times of economic uncertainty, investors more often than not start to invest in physical commodities such as gold, platinum, and silver — since these precious metals are widely perceived as having low volatility.
With that being said, due to the changing face of the global economic terrain, we need to highlight the fact that despite gold being a decent SOV (Store of Value), it’s recurring profit margins have reduced quite significantly over the past decade or so. In the same breath, we can see that other assets such as oil are now beginning to deliver better returns when compared to stocks and other such financial offerings.
Other Points Worth Bearing in Mind
When looking at things from a purely objective standpoint, we can see that the stock market has not consistently exhibited correlations with the crypto sector (over the past couple of years).
Thus, using correlation/non-correlation based indicators when investing in altcoins can be quite a risky activity. However, this is exactly what makes Bitcoin such an attractive investment avenue for a lot of people — since if the US Dollar continues to dip in value, we may see BTCs global adoption rate increase at a speed that we might have never witnessed before.
In closing out this piece, it should be pointed out that as traditional stock markets all over the world continue to plummet, it will be interesting to see how the future of crypto (especially Bitcoin) plays out from here on end.
Bitcoin’s price is $7,374.31 BTC/USD exchange rate today. The real-time BTC market cap of $130.58 Billion currently ranks #1 with a chart dominance at 56.01%, daily trading volume of $8.99 Billion and live coin value change of BTC 0.75 in the last 24 hours.
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