As can be seen, the stock market is booming in the United States. Many are now legitimately asking themselves what this means for Bitcoin.
Do bitcoin and the stock market have something in common?
The US stock market rises and rises. The four largest technology companies, Apple, Microsoft, Amazon and Alphabet, are now worth $ 4 trillion. Nasdaq and the Down have also reached a record high.
For many investors who entered the market in good time, this is a good sign, for anyone who wants to do it now or is thinking about it, it is much more expensive. The question that everyone is starting to ask is how long this will continue.
When the market is so strong, you should be a little more careful when considering risky investments. However, many take advantage of the opportunity and choose volatile stocks and alternative financial instruments. Tesla’s stock alone rose 33 percent last year, Bitcoin’s price increased 92 percent. For most investors, this “gamble” is still too delicate. Many make a living from it and therefore have to be very careful about it.
Many look at Bitcoin, who are also active in the stock market, even if it differs somewhat.
As many know, Bitcoin does not follow the same rules as the stock market. The price is not determined by sales, but only by demand. At first glance, this is simplified because you don’t have to pay attention to profit reports or sales targets. Still, the bitcoin market is a bit more complex.
You have to know the basic metrics, such as the coins in circulation (currently 18.1 million Bitcoin) and the total number of users (this can be estimated from the wallets created). You should also pay attention to the speed of the network, which is calculated based on the transactions per second, and the security, which depends on how many mining devices process blocks.
Trying to get everything under control is next to impossible. You could still check how much mass acceptance is progressing, but again you have to watch out for fake news. In total, there are simply too many factors that make it impossible to estimate the direction exactly when considering the future of Bitcoin. This environment is particularly difficult to assess for new investors.
Many crypto proponents believe Bitcoin is the safe haven should the stock market collapse. They expect the price to remain stable, if not increase, if the traditional markets go down. If you rely on this scenario, now can be the right time to get started with Bitcoin.
However, if you take a closer look at the safe harbor, some things don’t quite seem to fit. It starts with the fact that there is hardly any correlation between the performance of Bitcoin and the stock market.
These points are being looked at more closely by new investors and institutions, which is why many of them are not yet fully confident in the crypto market. It remains to be seen whether this will change in the future, the question is also how the crypto market can build more trust.