Bear market among stocks: What is the impact on Bitcoin?

A month ago, Juan’s cycle model gave its first bear market signal on the US stock market, since Bitcoin came on the market.

Yesterday, we gave an important video conference in which we warned that the next phase of the stock market downturn could begin in April. (Click here to view it).

And today’s $ 64,000 question is: Does the stock bear market lead to a parallel bear market for cryptocurrencies as well?

History Doesn’t Help Us

Usually, the first place to look for answers is historical market patterns.

For example, we know that the ups and downs of Bitcoin are strongly related to those of alternative money.

In the gold market, we know that the state of the US dollar is an important factor.

And in the world of common currencies, almost all currencies except the US dollar move in sync.

But what is the impact of the bear market on Bitcoin?

As I just told you, the S&P 500 has been in a long, nine-year bull market phase since Bitcoin came on the market – until last month. So we don’t have a single bear market phase compared to Bitcoin.

These are the facts we have:

Fact # 1. No correlation.

Whether we look at daily, weekly or monthly fluctuations, there is virtually no statistical relationship between stocks and crypts.

Fact # 2. The Bitcoin bear market started in 2017. in December.

The stock market peaked only nine months later. During this time, Bitcoin fell 63.5% and the S&P 500 rose 10.1%. So again, no connection.

Fact # 3. Similarities with gold.

If there are similarities between Bitcoin and any other asset class, they are not equities. That’s gold.

Like gold, Juan says Bitcoin’s main purpose is to be a store of value . This is so noticeable that in some circles it is already called “digital gold” and “gold 2.0”.

As never before, Bitcoin and other cryptocurrencies have become a haven for investors fleeing the devaluation of common currencies. In fact, they can be even better than gold in one respect: No government can confiscate them.

And if you look at the bigger ups and downs of the Bitcoin market, you’ll see another important resemblance to gold:

• At key market peaks, both Bitcoin and gold take sharp turns. We call them ” pinpoint tops “. If …
• At important market bases, both Bitcoin and gold form long curved patterns. We call them ” rounded bottoms “.

Fact # 4. Crypto is a risky asset.

Of all the factors we’ve looked at, this is the only real concern: Many investors only see things from a narrow, short-sighted perspective. Everything is either “risky” like stocks and speculative real estate. Or “risk free” such as bonds and certificates of deposit (bank CDs) .

So they classify crypts as risky.

This raises an important question: If they see their stock portfolios suffering in the bear market, will they rush to sell everything else they risk – including crypts? Possible.

If stocks fall, will this phenomenon push crypt prices to the bottom? Maybe.

But cryptocurrencies are already very low, and most equity investors who also own crypt are newcomers to this world. Their cryptographic assets are almost always red.

We can’t imagine most investors waking up one morning and saying, “Oops! I have suffered a lot from shares! I better sell my crypts to increase my money supply. ” And we doubt that this factor will be a major driver of Bitcoin prices.

The gold went north. Bitcoin should do the same soon.

According to the yuan cycle model, gold reached the bottom of its cycle in August last year and is now at the beginning of a new three-year cycle, although the rise is still in its early stages.

This year, it could break through a significant zone at $ 1,400 an ounce, the highest in five years. If that happens, gold will have a good chance of catching all-time highs at $ 2,000.

Bitcoin doesn’t lag far behind him. The graphs tell us that it is still in the bear market now, but the improving baseline parameters say that a new bull market is coming.

First , even as market prices fall, some newer, more advanced cryptocurrencies – such as EOS, WAX and TRON – have significantly increased their take-up rates.

Secondly , some alternative currencies are showing signs of finally escaping the bear market. Ethereum, for example, rose from $ 83 to $ 160 from mid-December to early January. And it wasn’t the only alternative currency with a large market share that could stop its decline. Ripple’s XRP also made a significant turnaround as early as the 20th. September. Together, they account for 23% of the market value of cryptocurrencies.

Thirdly, and most importantly , shared ledger technology is making tremendous progress. The EOS is now many times faster and more scalable than Ethereum. New money – like Holochain and Hedera Hashgraph – is already moving beyond the blockchain. Although they are relatively unknown at the moment, they may one day reach the Top 10 of market value.

To sum up: Don’t let the bear stock market reasonably discourage or discourage you from investing in cryptocurrencies.

For now, however, until Bitcoin has shown that its own bear market is over, it is wise to be careful.

The best,

Martin

Article – Weiss Ratings

Translation: Lucreds Plus OÜ