Almost all digital currencies were down more than 50% in last few weeks, but stocks across the world have also seen some of their major losses in a year.
Stocks have seen an incredible bull run for much of last year, adding trillions and trillions to the global market cap. Similarly, cryptos have improved significantly in price, rising to a market cap of $800 billion at the all-time high.
Up to the beginning of this year, cryptos and stocks have apparently moved in the same direction. If we ignore the velocity of rise and fall, so, the track for both crypto currencies and stocks seems to be virtually similar. The intention for it might be that digital currencies are now seen as a substitute to stocks, particularly perhaps due to the ICOs phenomena.
It might also be that investors in crypto and stocks correspondence, with both usually inviting a higher level of risk takers trying to earn returns on parts of their savings.
In contrast, gold no longer seems to be correlating with cryptos much at all while it had a contrary correlation relationship of sorts with bitcoin previously.
Where the Investors are going to Invest?
Talk about market equity dissolving before us. Over 5 Trillion dollars has been wiped out form the markets since the start of February with around 2.5 Trillion being erased in the USA alone.
With carnage in the markets you would think that gold would be bullish. Quite the opposite, it is down with equities. Now much of this is modest institutions that use gold for a hedge are now selling to cover their margins. Yet, with all the remains in the markets, smaller investors as well as larger investors are going to look for not only a safe haven, but for growth that can equalize their losses, and a hedge vs inflation. So what will they purchase now?
Bonds
Not much promising anymore.
Stocks
There is merely not a lot of WORTH in the stock market irrespective of what you may hear. Simply you are paying a premium for growth like NVDA with a PE or Amazon.
Gold
Certainly, we will see a growth in gold prices, but the world economy is still developing, and it is already trading at the top of its range. Now the gold is an inflationary hedge, but many already own gold, so how much further can flow into this marketplace? Most hold "digital gold" and a little physical.
Cryptos
After the hearing of senate 2 day ago, it can be seen that money will start flowing into the crypto market. Money managers are eyeing for growth at present and with a 400 billion dollar market cap, and the future being positive for block chain technology, there is plenty of room for growth here. Merchandising investors that are pulling their money out of the market overall, are anxious about inflation which shrinks their procuring power, and another round of QE, to settle the markets, would be a helping hand for deflationary currencies such as ‘Bitcoin’ and ‘Ethereum’. Who wants fiat decline?
Is this a risky market? Absolute, it is, but the potential it has is incredible.