Over the last two years, in which crypto was going down only, I had enough time to expand my knowledge of stock markets, real estate, precious metals, and commodities. As I explored them, I also started to find possible correlations between the market's reactions and sentiments.
While the crypto market was only forming lower lows, it was not very possible to spot the correlations in the long and short terms. However, now that the market is back, I think we will see the reactions of both markets to global news as before.
Recently, I realized some important price actions on S&P and NASDAQ on October 23 - 30 while crypto was also getting prepared for a massive pump at similar times. Let's have a look at it and brainstorm accordingly.
S&P and NASDAQ on October 23 - 30
This was the time when NASDAQ was going lower and lower but it had reached 200-Day support line.
That was a good point to turn back from!
While there was a downtrend in NASDAQ, it was able to retrace from the moving average and also the volume was high enough to make investors believe that it might be the point when the market will start another huge green candle.
Actually, it also happened.
The trend has been very strong and the bulls outperformed bears since 200-day support.
How about S&P?
It was in a terrible situation.
The index was below the support and moving average levels whereas the RSI was the only indicator that showed some positive signs for S&P 500 Index.
As NASDAQ started a run, the same thing was observed on S&P, too.
Keep in mind that the high interest rates drained the markets deeply but the U.S. based markets were standing strong as they became cheap to buy for the long term begs.
Similarly, the drastic drop in the price needed to be covered as soon as possible before a wave of sell pressure hits.
Crypto Comes to Rescue?
Both stock and crypto markets might be affected by the same "positive" news but such a similar pattern is interesting.
Let's think about the reason why would crypto be set free to go parabolically higher:
First of all, the crypto market is a catalyst of risk appetite. The positivity in crypto may sign a turning point for the market to be green once again.
The times when the stock market cannot break above the strong resistance levels or the prices go lower than the support prices, the crypto market encourages people to put their money in the risky markets.
Also, the investors want to see a correlation between S&P, NASDAQ, and crypto because they can be easily tracked and the actions might be more "foreseeable" if the crypto becomes one of them. Yet, the untamed nature of crypto, eventually, diverges from the others.
Finally, it might be a coincidence, too. Though such an action in the charts seems beyond the possibility of a coincidence, the markets may have completely different investor profiles. To be honest, the price actions on these charts will be unforgettable for me especially when I want to focus on the correlational performances.
I still believe that crypto was gifted such an impact on the markets.
What do you think about the similarity between the performances of the crypto and stock markets?
Share your experience below 👇
Hive On ✌🏼