A Troubled Relationship: CRYPTO DIVORCES DOW!
A few months back I mentioned that the movements of the crypto market mirror the movements of major world markets, The Dow in particular.
At the time the Total Crypto Market Cap chart looked like a copy of The Dow, just with amplified market movements, i.e. higher highs and more severe lows.
Acknowledgement: On all charts in this post, DJI comes from TradingView and Total Market Cap of Crypto comes from https://coinmarketcap.com/charts/
A Troubled Relationship: CRYPTO DIVORCES DOW!
Crypto Total Market Cap was closely married to The Dow, but the relationship was not a happy one.
Crypto and The Dow in happier times. Note the closely correlated shapes of the charts: (Crypto Market Cap overlaid on The Dow):
I've used points A to F to show specific correlations between high and low points, just to demonstrate how well the charts mimic one another. The charts are exactly matched in time (from 1 September to today). Red circles are The Dow and blue ones are Crypto.
Trouble in paradise
Tired of suffering years of abuse, crypto finally opened her eyes and realised what a selfish, greedy, old, abusive and corrupt partner she was married to. She filed for divorce in March, and now she is free!
I'm not kidding. I may be using an amusing marriage analogy, but the facts are real, look at the latest few months of the same two charts:
It's incredible! Within a matter of a mere week or two, a direct correlation became an inverse correlation! This is once again clearly seen by the corresponding different circled and linked on the two overlaid charts.
Why the change? What does this mean?
Bit Brain regards this as a very positive sign for crypto. I believe that this is the ultimate indicator that crypto is now established and respectable enough to be taken seriously and to stand on its on two feet. No longer is crypto just regarded as a "tech stock" or "a bunch of penny stocks" by the greater investor community.
Crypto is being seen for what it is: not a stock, but a technology. Cryptos are the application of blockchain technology to solve everyday problems in ways that were not possible before. It's about creating a better, faster, fairer, more scalable, honest, borderless future. Crypto does not need to be linked to the old stock markets, and now, finally, it no longer is!
This means that when stocks do poorly, people may now consider running to the new safehavens! No longer will gold be the sole de facto foolproof store of value. While gold will always be used for that purpose, crypto will too. The advantage with crypto is that it's decentralised. Unlike gold, most of which lies in the private hands of the super wealthy who pilfered it away from the currencies that it used to back decades ago, crypto is in the hands of everyday people. Sure, the super rich hold it too, but the playing field is far more level than before!
So finally crypto is free! Free to go about her own business as an independent entity. Free to attract new investors of her own. Free to grow without requiring the consent of other markets. Sentiment towards crypto is no longer regarded as being the same as sentiment towards other markets; a market like The Dow can now crash and leave crypto unscathed...
Yours in crypto,
Bit Brain
Published on
by Bit Brain
For reference, here are the two unmodified source images, so you can see I haven't changed the data at all:
Great post, I have been tracking this correlation as well and logically when the market crashes, crypto should go up.
Yeah. I didn't tell the full story in this post: it's not to say that the relationship is directly inverted, they are now just far more decoupled. But yes, the general trend should be Dow Jones down = crypto up. I think it's very interesting and regard this as one of the most overlooked positive signs for crypto.