How does S&P500 relate with Crypto Currencies
Forex & Stock market has been traded for centuries and people make a living form that. Day traders mostly focus on smaller time-frames and taking advantage of political and economic data release since the market is volatile during that time. As for the swingers and long term investors they focus on the larger time-frame using the S&P500 as the benchmark.
How Does S&P500 work as a bench mark
S&P500 is Known as Standard & Poor 500 and it tracks the performance of 500 large big companies in the US. It is amongst the most followed Equity indices as an indicator of the US Economy. The performance of the US Economy is seen by the performance of the Top 500 Big companies. If economy is on the right track the companies will be performing well, but if they are performing badly investors will withdraw their monies from their investments and they invest in something stable to avoid losses, preferably Gold.
The above screenshot is a daily chart of S&P500 and i put up a red horizontal line marking the date 22 Nov 2021 and i marked the area with red. We can see that from 22 the S&P500 has been bearish. If we look again the US Dollar index which measures the general strength of US we will see that it was bearish on that very moment, meaning to say the economy was performing badly. That time everything was falling, even gold and only Tech shares were surging that period.
How does S&P500 impact Crypto currencies
It has always been a norm that when crypto analysts are analyzing a certain crypto, they always advice you to do your own research and above them all "Use what you can afford to lose". So with the current pandemic and Economic drawbacks most people lost their jobs and are now spending what they has saved for pension. So if the economy is not performing well that period, people will not gamble their money on crypto currencies since they move up and down.
On the same date when S&P500 was bearish , the crypto market was bearish aswel. If you check you will see that even Bitcoin and Ethereum fell, meaning to say the economy was bad for people to invest in crypto currency so they decided to invest in Tech shares. The screenshot above is proof enough to tell that Crypto currency moves hand in hand with S&P500.
Other Possible reason for a Bearish In Crypto Market in November
We know that November people will be preparing to go for holidays and when doing so the companies will not be operating at full capacity which means production will reduce and this will impact the economy and low data earnings were recorded.
There is also a possibility that investors might have liquidated their positions from stocks, crypto currencies and spend the money on their vacations. This could be another valid reason because S&P500 was falling, Gold was falling and Crypto market was falling again and this means that the money was not being invested on another asset, instead it was being chopped.
