Update on cryptocurrencies prices

in #update6 years ago

Bitcoin Price Is Correlated To Stocks

The trading industry won’t have you believe this because their pay checks often depend on the imaginary gift of calling market direction. The history of Wall Street is strewn with amazing traders that were genius and massively profitable when the trend was with them but crashed and burned when the trend got to a bend in the end.

So what do you do when you are a financial institution that the Federal Reserve offers infinite money to for almost free? You’d better find yourself a way of trading with that money that isn’t going to blow up, that you can get quickly back, and that pays a fat coupon beyond what the Fed is going to charge you.

You need a "carry trade" (borrowing at a low interest rate and investing in an asset that provides a higher rate of return). You need lots of "carry trades." With trillions on offer almost any trade will do.

What is a no-brainer is to buy stocks. The liquidity is there, there is yield and everyone else with access to the ocean of money is going to be buying stocks and pushing them higher. This is the story of the mega-bull market post 2008-2009.

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