Is it possible for someone to argue that the pricing volatility in the crypto currency Bitcoin suggests the mood of investors’ sentiment, way back before the moves to be followed-in shares and stock marketplaces? The answer to this question is affirmative as suggested by some of the world’s big investment pundits! The Wall Street Journal has reported that Mr. Doug Ramsey who is the chief investment officer of M/s Leuthold Group; which is the company instrumental in conducting economical quality research for the sake of institutionalized investors; has said that - we have started to keep a close watch over the pricing of Bitcoin in our efforts of monitoring the signs of predictability sentiment. Mr. Tom Forester who is the chief investment officer of Forester Capital Management too has echoed the same sentiments by saying that – “Of course, we understand Bitcoin as a metric of sentiments of people in the stock market.” 

While Public Sentiment Seems To Defy Fundamentals 

Extensive analysis and research done by DataTrek Research has demonstrated that the relation between the crypto currencies and stock market jumps to its peak point when people start believing their sentiments more than that of the fundamentals. Fundamentals remain the primitive derivative of the moves done in the stock market, as per the reports of The Wall Street Journal. Both of the sources conclude to a single narrative that in the last month of the previous year, as well as, in the first month of this year; public sentiment was the primary driver in the stock market. Mr. Nicholas Colas who is the founding member of DataTrek Research has commented that the correlation among the crypto currency prices and the stock market prices becomes substantial at the point when both of the crypto currency and the stock markets start falling in a downward swivel. He also pointed to the phenomenon that this correlation has successively became less powerful after the recently happened market correction in the stocks ended. 

People Don't Want To Take Risk Anymore 

It often happens that investors who have a greater appetite for the risk; those who are instrumental in investing in volatile assets, cease their activity of investing in such risky assets. In hundred percent of such cases it has been observed that a general downward turn in the values of the assets occurs. Today, it might be possible that crypto currencies have started to play the role which earlier classes of assets used to play in the previous Bubbly market, as per the theory of the Wall Street Journal. During the dot-com-bubble phenomenon of the 2000s; we all have witnessed that such assets which were speculative to the core having the most absurd stories of profits were those classes of assets which were the hardest and earliest to be burst; as per the hypothesis put forward by The Wall Street Journal. 

Recent Example 

The Standard and Poor’s 500 index which is known by the name of SPX has decremented by a level of 10.2 per cent within the duration of correction mechanism happening in the crypto currency markets which was among its record highest closing point on 26th of January and just occurred lowest closing happening on 8th of February. It was that period of time in which we have seen the worst fall out of Bitcoin crypto currency registering a deep decline of 25.7 %, in that particular duration of time. Overall, from the levels of December it fall by a gigantic level of 65%.

The Absurdity Of This Concept 

Mr. Jason Ware who is the chief investment officer of Albion Financial Group; was scathing his head on the question of considering Bitcoin pricing as an advanced metric of speculating the stock prices. He said that saying Bitcoin has become a big time indicator related to the prices of stocks and shares, is a very debatable topic. His consideration regarding this hypothesis is that – “This is absurd!” He is of the firm belief that the pricing of stocks as well as the return of investment which could be gathered from real share market depends upon inflation and interest rates, corporate earnings, as well as the overall health of the economy.