Bitcoin is the lead indicator for stock market investments, top investor says

  • The eminent investor Mark Mobius has said Bitcoin sentiment is used to inform moves in the stock market.
  • For as long as there is talk of buying the dip, then stocks cannot be said to have reached a bottom, he added.

Investor sentiment over Bitcoin (BTC) is directly related to sentiment in stocks, Mark Mobius has opined. Trends in the digital asset are now being used to inform investment in the equity markets, he added.

Mobius, the co-founder of Mobius Capital Partners, and a prominent investor spoke of the above relationship in a Wednesday interview with Bloomberg.

“Cryptocurrencies are a measure of investor sentiment, Bitcoin goes down, the next day the Dow Jones [Industrial Average] goes down. That’s the pattern you get. That shows that bitcoin is a leading indicator.”

Bitcoin trends inform stock market bottoms: Mobius

Mobius’ observations come at a time when the crypto market is experiencing a major slump. The overall crypto market valuation is now at $946 billion, a mouth-gaping drop from its November $3T+ valuation. At writing time, Bitcoin was trading at $20,500, down over 70 percent from its near $70K November all-time high. Majority of the other cryptocurrencies have mirrored its downtrend, hence the fall in market cap.

On Saturday, Bitcoin dropped below the critical $20K level, going down as low as $17K. As much as the digital asset has recovered to trade above $20K, the fact that it has not significantly moved upwards from that level is a point of concern to many.

Drawing insight from historical trends, several analysts now argue that Bitcoin could still trade at $13K. The not-so-optimistic lot, like China, has warned that BTC is now headed to its grave. The country still has an outright crypto ban enforced, one which has been tightened since Terra’s implosion.  

Some institutional and retail investors are still putting money into cryptocurrencies, Mobius went on. The moment they stop due to a sharp decline in prices, “that’s the time to start buying stocks.” 

The bottom is yet to come

Just like the crypto market, US stocks have seen a major bleed. The trigger has been the Fed’s hike in interest rates, done to curb the current 40-year high inflation. The S&P500 and the NASDAQ composite have plummeted 20 and 30 percent, respectively. Market watchers have now been seeking the tell-tale signals that the wide sell-off has come to an end.

If Bitcoin investors still talk of “buying on dips,” (the likes of Michael Saylor’s MicroStrategy) it means the market is hopeful. It also means “we have not reached the bottom of a bear market,” Mobius noted.

Crypto influencer Anthony Pompliano recently said retailers who were thriving on fast gains, are now selling to strong hands. The latter means those who buy and hodl, rather than time the markets.