As we are heading into the weakest period of the year we start seeing several bearish signs. Volatility, or, lack thereof, was concerning two weeks ago. We wrote in our S&P 500 forecast for 2017 (October to November) that stocks could correct meaningfully in a worst case scenario. Whether markets will correct softly or strongly, the key question remains which safe havens will see an inflow of capital. Will it be the traditional safe havens like the Swiss Franc, the Yen and gold? Or will cryptocurrencies, which have recently started to move to the forefront of the investment world, start acting as safe haven asset?
InvestingHaven’s research team does not pretend to have an answer to that question, the reason being that crypto assets are a totally different asset class. On the one hand that means they are still in development; the investment world is faced with a new situation in which crypto assets have grown to this level of popularity. Because of that, it is unclear what type of dynamics and correlations there are between “traditional markets” and crypto markets.
Will an outflow out of stocks lead to an inflow into cryptocurrencies or other crypto assets? If so, to which extent?
These are interesting questions, and the answers are to be confirmed. Investors should continuously research in order to understand answers to those questions.
Embedded in this articles is the top 9 cryptocurrencies chart since last summer which marked the end of a volatile stock market period. In other words, since last summer, stocks and broad markets have been quite. In that period of time cryptocurrencies have truly exploded.
So this chart learns us that cryptocurrencies do not wait for market corrections in order to move.
It will be interesting to see what happens with this chart as markets start correcting. Moreover, it will be interesting to see whether gold and cryptocurrencies move in tandem as markets correct.
InvestingHaven will closely follow these trends in the coming days and weeks.