$65k left after taxes. i had a couple things to pay off, but i'm putting the remaining $45k on SOL/XRP.

(http://www.autoadmit.com/thread.php?thread_id=5674235&forum_id=2#48615064)

Investigating crypto correlations

I’m piecing together how crypto values tie to the economy and the stock market. Initially, Bitcoin showed minimal or negative correlation with stock market returns.

Noticing crypto's investment shift

Since 2020, crypto's correlation with stocks has strengthened due to institutional interest and economic factors. Crypto often mirrors stock trends as a high-risk, high-reward investment.

Navigating crypto trends

Crypto's interaction with stock markets varies: sometimes it dips more, sometimes it diverges, influenced by macroeconomic factors and market stress, illustrating its complex behavior and potential as a hedge.

Examining the dynamics

Crypto often moves with stocks, but exceptions happen. During GameStop's surge in early 2021, cryptocurrencies like Dogecoin skyrocketed while stocks behaved differently.

Piecing together the narrative

Bitcoin's 2022 drop mimicked the stock market's dip, but it soon rebounded significantly, unlike the ongoing stock struggles. The IMF notes bitcoin's price surge post-pandemic crisis responses.

Assessing Bitcoin's potential

The growing interest from investors since 2017 shows Bitcoin and stock markets are somewhat linked, though Bitcoin's varied correlation over time suggests it might act as a hedge.

Tracing correlations

Crypto and stocks link up during crises but often break apart. Stocks more easily impacted by shocks, while crypto might weather these shifts better or even rise while stocks dip.

Navigating crypto's market

Crypto often aligns with financial turmoil, then diverges. It's typically a risk-on asset, though some investors see it as a potential long-term hedge against fiat currency devaluation.

Understanding the correlation

Cryptos, influenced by macroeconomic factors like interest rates and inflation, exhibit volatile relations with the stock market and tech stocks, often mirrored by their erratic price movements and limited history.

Tracking trends

Cryptos show a slight link with tech stocks in volatile times. Sometimes they split in trends: crypto might surge while stocks slump or vice versa.

Tracking shifts

Crypto's movements often mirror stock trends, but isolated instances or brief periods show it rising while stocks fall, especially around events like global financial crises.

Navigating volatility

Crypto and stocks often move together during high volatility. Occasionally, crypto spikes when stocks dip, like after a global financial crisis, though clear evidence is scarce.

Weighing factors

Crypto's value dances to its narrative narrative and adoption, often out of sync with market trends. This dynamic makes it a highly speculative investment.

Tracking correlations

Crypto's correlation with stocks is moderate when adjusting for volatility, showing periods as a hedge. Bitcoin aligns uniquely with tech stocks but dips during market stress.

***ANSWER**

Crypto values are influenced by many of the same macroeconomic and market‐sentiment factors that affect stocks, but their relationship isn’t fixed—it’s dynamic and can vary over time. In recent years, especially since the onset of the COVID‐19 crisis and the ensuing monetary policy shifts, cryptocurrencies (with Bitcoin as the most prominent example) have shown a moderate positive correlation with stock markets, particularly tech-heavy indices. For instance, some analysts have observed correlations around 0.5 between Bitcoin and tech stocks during certain periods, meaning that, to some degree, investor sentiment and liquidity conditions tend to push both asset classes in similar directions. This has been driven in part by institutional participation and the fact that many investors treat crypto as part of a broader risk‐on portfolio, responding to factors like interest rate changes, inflation expectations, and geopolitical events.

At the same time, academic studies and empirical analyses have found that the overall time-varying correlation between Bitcoin and traditional equities can be relatively low, suggesting that—at least over longer periods or during certain market conditions—crypto might offer some diversification benefits. For example, research using models such as BEKK GARCH and DCC MGARCH (see

ARXIV.ORG

) indicates that while cryptocurrencies and stocks sometimes move together, there are periods when their paths diverge.

Regarding whether there have been times when the stock market goes down significantly while crypto goes up, the picture is more nuanced:

• During severe market stress:

In many broad “risk-off” episodes (such as during the initial COVID-19 panic in early 2020), both stocks and cryptocurrencies have tended to fall as investors sell riskier assets. In these scenarios, crypto has not behaved like a traditional safe haven.

• Instances of divergence:

However, there have been isolated instances or shorter periods where the drivers behind crypto (such as narratives about decentralized finance, increased adoption, or reactions to specific regulatory or political signals) have led to gains even when equity markets were under pressure. Some market participants and analysts—drawing on anecdotal evidence and alternative scenarios discussed on platforms like Reddit—argue that if a severe loss of confidence in fiat currencies were to occur, crypto could potentially rally as investors seek alternatives. Still, such a decoupling is not the norm; most evidence shows that on a day-to-day basis, cryptocurrencies and stocks tend to be positively correlated, albeit imperfectly.

REDDIT.COM

In summary, while crypto and stock values often move in tandem during periods of high volatility and stress—reflecting shared investor sentiment and liquidity conditions—the correlation is not constant. There have been episodes of divergence, but the overall historical record shows that significant market declines are more commonly accompanied by crypto declines as well. That said, because the crypto market is still relatively young and driven by its own set of adoption and technological narratives, its correlation with traditional assets can change as the market matures.

(http://www.autoadmit.com/thread.php?thread_id=5674235&forum_id=2#48615230)