With out the US inventory market outperforming, the cryptocurrency market would have problem delivering a constructive return in 2023
S&P 500 leads the cryptocurrency market
Crypto traders ought to watch US financial knowledge intently
The cryptocurrency market had a robust begin to the buying and selling 12 months. After affected by a bearish market in 2022, the rally that began in 2023 brings a lot aid to traders within the cryptocurrency market.
The passion is comprehensible.
In spite of everything, Bitcoin, the main cryptocurrency, is up +45.93% YTD. Nonetheless, earlier than getting too excited, long-term traders nonetheless take a look at the 1-year losses of -35.62%.
Subsequently, as soon as once more, timing the markets is necessary. These going lengthy crypto firstly of 2023 loved a powerful efficiency, whereas those who remained invested for one 12 months nonetheless benefit from the so-called “crypto winter.”
However why did the crypto market bounce? The reply lies within the chart beneath – due to the US inventory market rally.
S&P 500 chart by TradingView
S&P 500 leads the cryptocurrency market
The chart above reveals the S&P 500’s efficiency for the reason that high in late 2021. Since then, the primary US inventory market index misplaced -16.36%.
Under are the three main cryptocurrencies – Bitcoin, Ethereum, and Ripple. Whereas they peaked a bit earlier, they misplaced between -60% and -70% in worth from their 2021 highs to the 2022 lows.
So the bounce within the cryptocurrency market could look as being in response to traders turning their consideration to the business once more, however as an alternative, it’s all concerning the US inventory market. The S&P 500 rallied in 2023 too.
Nonetheless, the scale of the 2 actions are completely different due to the distinction between the S&P 500 and the cryptocurrency’s volatility.
In different phrases, given the present context, it’s onerous to see the cryptocurrency market’s rally proceed if the S&P 500 index doesn’t carry out. Therefore, crypto traders ought to care concerning the US inventory market as a result of the S&P 500 leads the positive aspects or losses within the cryptocurrency market.
