Investor sentiment towards Bitcoin (find out how buy Bitcoins with our guide) is directly related to sentiment towards stocks, said Mark Mobius. Digital asset trends are now being used to inform equity market investments, he added.
His interview with Bloomberg
Mobius, co-founder of Mobius Capital Partners and a major investor, spoke about this relationship in an interview with Bloomberg.
“Cryptocurrencies are a measure of investor sentiment, Bitcoin falls, the next day the Dow Jones [Industrial Average] falls. This is the pattern you get. This shows that bitcoin is a leading indicator ”.
Bitcoin Trends Inform Equity Markets: Mobius
Mobius' remarks come at a time when the cryptocurrency market is experiencing a major slump. The overall valuation of the cryptocurrency market is now $ 946 billion, a staggering drop from the November valuation of more than $ 3T. At the time of writing, Bitcoin was trading at $ 20.500, down more than 70% from November's all-time high (nearly $ 70.000). Most other cryptocurrencies mirrored its downward trend, hence the decline in market cap.
Bitcoin dipped below the critical $ 20K level on Saturday, dropping as low as $ 17K. While the digital asset has recovered to trade above $ 20K, the fact that it has not moved significantly higher from that level is a point of concern for many.
Based on historical trends, several analysts argue that Bitcoin could still trade at $ 13.000. Less optimists, like China, have warned that BTC is heading for the grave. The country still has an absolute ban on cryptocurrencies, which was tightened after the implosion of Earth.
Some institutional and retail investors are still investing money in cryptocurrencies, Mobius continued. The moment they stop due to a sharp drop in prices, "it's time to start buying stocks."
We haven't hit rock bottom yet
Just like the cryptocurrency market, US stocks also suffered a heavy bleeding. The trigger was the Fed's hike in interest rates, designed to curb the current 40-year high inflation. The S & P500 and NASDAQ composite plummeted 20% and 30% respectively. Market watchers are now on the lookout for the telltale signs that the broad sell-off has come to an end.
If Bitcoin investors are still talking about “buying on the downside” (like Michael Saylor's MicroStrategy) it means the market is bullish. It also means that "we haven't hit the bottom of a bear market," Mobius noted.
Cryptocurrency influencer Anthony Pompliano recently said that retailers who were thriving on quick earnings are now selling strong hands. The latter means those who buy and settle, rather than timing the markets.