Note: “This analysis is an adaptation from the work of Mati Greenspan, Senior Market Analyst at eToro
- Google searches on Bitcoin seems growing since it got volatile
- Crypto price movements look tied up to equities
- Crypto finds a new supporter in Allianz’s Mohamed El-Erian
Volatility makes Bitcoin popular
Bitcoin was in a stable range before hell broke out and prices started collapsing before it touches the year lows. Not a lot of people invested in cryptos were happy with this fall, but people at large seem to have again got excited as bitcoin regained its volatility. According to the data of google searches for the word, Bitcoin has risen sharply since the volatility has come back to the top coin and has reached the highest level since April 2018. Certainly, it would be better for the use case of cryptocurrencies if they remained more stable, or to see a slow but steady increase in prices. But let’s be straight, would bitcoin be as popular as it is today if not for the wild volatility? The outrageous bull run of 2017 has been largely responsible for bringing an unprecedented number of new users into the network but it seems that excitement can be generated on the way down as well. Of course, they’re still nowhere near the levels that we saw in late 2017, but they are well above anything seen before May of 2017.
Crypto prices still look tied to Equities
A lot has been spoken about how crypto prices are not linked to equity and some analysts also believe that money from falling equities has found investment in cryptocurrencies. But every time there is a new set of data that comes up to prove that cryptos and equity prices go hand in hand. Speaking of Bitcoin, and more specifically its relationship to the stock markets, it’s impossible to ignore that it’s been moving in lockstep with the equities lately. In this next graph, we can see bitcoin in orange and the Dow Jones in purple over the last week and a half. There has been data that has shown how on a day to day basis it is very little or no correlation between stocks and crypto. But as we can see in the graph, there are certainly profound moments when their two paths are connected somehow.
Speaking of Equities and Bitcoin, Bitcoin seems to have found a new fan from the equity world. Its Mohamed Aly El-Erian, the chief economic adviser at Allianz, who has forecasted that “they will become more and more widespread.” And what more exciting here is he sees crypto assets as a new part of the broader economy and not a replacement of it.