It was believed that there was no correlation between Bitcoin and traditional financial markets. For this reason, some investors were recommending that digital assets such as Bitcoin should also be given in portfolio formation.
Is there a correlation between Bitcoin and traditional financial markets?
In the past period, we have witnessed the appreciation of Bitcoin after the developments that negatively affected the financial markets and the real economy. For example, after the trade wars between the USA and China in 2019, the value of Bitcoin and cryptocurrencies increased. Similarly, Bitcoin continued to appreciate after the interest rate cuts of the FED and the European Central Bank in 2019.
Please See: Can Bitcoin recover after the sharp fall?
In the first days of 2020, there was a development that shocked the world agenda: US forces assassinated Iran’s top military personnel, and the rumors of the 3rd world war came to light. In this period, while Bitcoin gained value, there was a serious crisis in the global financial markets.
With the effect of the panic atmosphere after the Corona Virus Outbreak, there is a crisis in the global markets. According to current statistics, the virus has been detected in approximately 150 thousand people worldwide. About 5,500 people died as a result of the virus. With the effect of the crisis, serious decreases are experienced in real production. Hotel reservations are being canceled, commercial air traffic is about to stop, and there are serious decreases in foreign trade data. Developments in the real economy also have negative effects on global financial markets. FTSE, S&P500, Dow Jones, Nasdaq etc. There are visible breaks in the indexes. Unlike other periods, the prices of Bitcoin and cryptocurrencies are crashing along with traditional financial markets.
Please See: Edward Snowden: “I thought of buying Bitcoin for the first time”
Glenn Benavides, CEO of Global Crypto, and David Waslen, CEO of Hedge Trade, recently drew attention to a fateful partnership between Bitcoin and traditional markets. In short, a correlation has been observed between Bitcoin and traditional financial markets recently.
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