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Post Info TOPIC: Is There a Correlation Between The Dow Jones & Cryptocurrency?


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Is There a Correlation Between The Dow Jones & Cryptocurrency?





The Dow Jones Industrial Average has had a difficult few weeks after a rather nice bull run. A correction is currently taking place with cryptocurrency. A linkage between the two investment spheres is possible. cryptocurrency news today


When transferring between each investment area, we need to be cautious when utilizing ambiguous terminology like "bull and bear markets." The fundamental cause of this is that bitcoin experienced gains of more than 10 times during its incredible 2017 "bull run." By the end of 2017, if you had invested $1,000 in Bitcoin at the beginning of the year, you would have made well over $10,000.


Nothing similar has ever happened in traditional stock investing. The Dow rose by almost 23% in 2017.


I review statistics and charts very carefully because I am aware that you can manipulate the figures to say whatever you want them to. In 2018, the cryptocurrency market had tremendous gains, and a swift drop followed. I'm trying to say that when we compare things, we should try to be as objective as possible.


The latest crash has surprised a lot of those who are fresh to the cryptocurrency movement. All they have heard is about how wealthy these early adopters were, driving Lamborghinis. Due to the recent price explosion, this market correction was very clear to more seasoned traders. Recently, several people became overnight billionaires thanks to various digital currencies. It was evident that they would want to take a portion of that profit off the table sooner or later.


The recent advent of Bitcoin futures trading is another aspect that, in my opinion, needs to be taken into account. Personally, I think there are powerful forces at play here that want crypto to fail, led by the old guard. Additionally, I believe that the popularity of crypto ETFs and futures trading are constructive moves toward establishing cryptocurrency as a "genuine" investment.

After having said all of that, I started to wonder: "What if there IS a connection here in some way?"


What if cryptocurrency exchanges like Coinbase and Binance were affected by bad news from Wall Street? Could it make them fall on the same day, both of them? What if the contrary were true and people started looking for other places to save their money, driving up the price of cryptocurrency?

I wanted to wait until we observed a largely neutral playing field in order to avoid trying to manipulate the figures and to be as objective as possible. Given that it coincides with a time when both markets experienced corrections, this week is about as favorable as any other.


For those who are unfamiliar, unlike the stock market, cryptocurrency exchanges never close. Since I've been trading equities for more than 20 years, I am all too familiar with the feeling of lounging around on a leisurely Sunday and wondering,


I truly wish I could trade a position or two right now because I know the price will change considerably when the markets open.


This Walmart-like accessibility might also encourage emotional reactions that are hasty and can go either way. People can push the pause button and reconsider their choices the next day in the traditional stock market.


I used the last seven days of cryptocurrency trade data and the previous five days of DJIA data to calculate the equivalent of a one-week cycle.


Here is a week's worth of comparisons side by side (3-3-18 to 3-10-18). The Dow dropped 1330 points, or 5.21%, as a result of 20 of the 30 companies that make up the index losing money.


Because a Dow technically doesn't exist, finding an apples-to-apples comparison for cryptocurrencies is a little different. However, this is altering as several organizations produce their own variations of it. Using the top 30 cryptocurrencies in terms of overall market cap size currently allows for the most accurate comparison.


20 of the top 30 cryptocurrencies, as reported by, had decreased over the preceding seven days. Sounds recognizable? The overall cryptocurrency market shrank from $445 billion to $422 billion in size. The gold standard's replacement, bitcoin, fell 6.7% over the same time period. Typically, cryptocurrencies follow Bitcoin's performance.


A coincidence or a cause? Why did we see findings that were so similar? Were were comparable factors at work?


Although the price decline appears to be identical, I find it intriguing that the causes are really different. We really need to peel back the layers because, as I previously mentioned, numbers can be misleading.


The main news affecting the Dow is as follows:


Strong pay statistics aroused concerns about impending wage inflation, which increased worry that the Federal Reserve could need to raise rates more frequently this year than the three times it had initially predicted, according to USA Today.


Cryptocurrency cannot be controlled by interest rates since it is decentralized. In the long run, higher rates might encourage investors to place their money elsewhere in search of greater profits. Crypto may very well be useful in this situation.


What else may have triggered the crypto market correction if not interest rates?


Conflicting information from various nations about what their attitude would be has a major impact on the market. Uncertainty exists throughout the world on whether or not some nations will accept them as a legitimate investment.

This past week, there were some encouraging reports from Jay Clayton's and Christopher Giancarlo's congressional testimony (CFTC Chairman). One got the impression that while they wanted to get rid of bad actors and make sure AML regulations were followed, they also wanted to foster innovation.


Uncertainty appears to be the connection between the two universes' similar outcomes.


Markets don't like uncertainty, as we all know. However, doubt is transient. Sometimes what worries one day can be remedied the next. Sometimes the news is so shocking that it renders the market inoperative for months or even years.

Sorting through all of this data and determining what is true and what is false is the key.


I think it can be quite profitable to closely monitor both stocks and cryptocurrencies as I am long on both. Profitable opportunities are available almost every day. This is particularly true in the case of cryptocurrencies, as I frequently purchase coins that have just had drops of 30% during the previous day, 30% the next day, and then 100% recover within a week.


I would advise staying as diversified as is necessary (this depends on the circumstances of each person). There are certain days when one is better than the other. It's convenient to have the option of logging into the account that had a better day for a morale boost. You might be able to relate to this if you have accounts in both universes.


Cryptocurrency is undoubtedly here to stay and will undoubtedly make investing more exciting.


If you want to know more about crypto visit here:


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