Crypto Becomes a Barometer For Stock Market Investors


Crypto has now reached a stage where stock market investors pay attention to its moves to determine whether stocks might go up or down.

“We’ve begun to watch bitcoin more closely as a sign of speculative enthusiasm,” said Doug Ramsey, chief investment officer of the Minneapolis money manager Leuthold Group.

Others are doing the same, including Tom Forester, chief investment officer at Forester Capital Management, who said: “We do view bitcoin as a sentiment indicator.”

That’s especially the case after a correlation was seen recently, with cryptos considerably falling first, followed by the stock market seeing its biggest points fall.

That correlation has reached 30%, according to DataTrek Research. The highest level it has ever seen and noticeable even by observation.

The reason is probably because the crypto market is now sufficiently big to affect some stocks, such as Nvidia.

An interrelation further shown recently by Square stocks going in a bull run after it announced the addition of bitcoin trading.

It could also be that with cryptos being far more volatile, they could be an early indicator for risk appetite changes, which are then reflected at the way slower stock market.

A stock market that has gone on to new highs now after strong US data job reports, with investors so seemingly brushing off the recent panic of sorts as the economy is pretty much booming.

Just as is money printing, with the European Central Bank minting brand new $60 billion euros every single month.

Euros that have to go somewhere. Sending house prices up and up, stocks to new highs, and probably cryptos too to a nearly one trillion market cap in January.

It remains to be seen now whether the seemingly changed sentiment in stocks might indicate a changing sentiment in cryptos.

With the economy fairly strong and ways to escape inflation remaining fairly limited, risk appetite could continue to increase as the roaring twenties near.

Cryptos and stocks, therefore, could see more overlap in the coming months and years as the march to mainstream continues.


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On 26 October 2017 the ECB’s Governing Council decided that net purchases would be reduced from the monthly pace of €60 billion to the new monthly pace of €30 billion from January 2018 until the end of September 2018.