US Stock Market Experiences Drastic Trend Reversal While Crypto Plunges

Over the past eight hours, the U.S. stock market demonstrated one of the most drastic trend reversals of 2018.

Throughout the past 48 hours, the U.S. stock market and the Dow Jones seemed to be experiencing a steep decline in value, as the Dow Jones crashed from 25,833 to 24,261, by more than 1,572 points.

Inverse Correlation?Cryptocurrencies often appeal to investors in the traditional financial market for their ability to store value in a market that is generally unaffected by broader markets.

While the emerging asset class suffers in dealing with its own volatility, like gold, the value of cryptocurrencies is solely affected by the demand from investors in the market.

“Non-correlation is not the same as inverse correlation so there’s no guarantee that when the market goes down crypto will go up. Over the long term, we think the fundamental drivers of crypto are different from the fundamental driver of equities and other assets, and we would expect the low correlation to persist.”

Generally, a well-performing stock market could have a more positive impact on the price trend of major cryptocurrencies because more investors are willing to take the risk of allocating capital into high-risk, high-reward assets.

If the U.S. stock market performs poorly, which then affects most markets in Asia and Europe, individual investors tend to reallocate funds from risky assets to more stable short-term bets like cash and treasuries.

This article was summarized automatically with AI / Article-Σ ™/ BuildR BOT™.

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