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Yours was a widespread conviction born of the idea that bitcoin and other crypto-assets would be seen as de-correlated safe-havens for funds drawn from volatile
by qubex 7y ago
Yours was a widespread conviction born of the idea that bitcoin and other crypto-assets would be seen as de-correlated safe-havens for funds drawn from volatile traditional equity markets.
The simultaneous drop in value is the very textbook definition of correlation, and therefore suggests that the same decision processes (perhaps even the same decision-makers) are operating in both types of markets and that, consequentially, bitcoin and crypto-assets are factually not alternatives at all.
- solotronics 7y agoEven more interesting is Bitcoin has been a leading indicator for tech stocks for some time now. Bitcoin drops often led FANG drops by a few days.
- qubex 7y agoOne of the prevailing ideas in several theories of financial market agent behaviour is that crashes occur when all or at least most participants’ horizons synchronise, leading to everybody acting on the same information uniformly. This is likely what is occurring: probably most investors are focussing on the here-and-now and thus on stopping their losses and/or reducing their exposure to risk.
- engineeringwoke 7y agoMakes sense. Good thought
- drcongo 7y agoExcellent reply, thank you.
- jules-jules 7y agoThe initial 2008 sell-off just like now also affected Gold negatively, although much less than Bitcoin now. I think BTC could be seen in a few years as a hedge against the USD.