Money Flow Matters: Both markets are sensitive to changes in the availability of money. For instance, when interest rates go up and loans become expensive, usually both stock and crypto prices decrease.
Fear and Greed: Both are influenced by the sentiments of investors in terms of taking risk. For example, when the economy is in trouble and people are afraid, they do not put money in risky investments.
Big Players: The arrival of big investment firms in the crypto market means that traditional market behaviors are now part of the crypto market. Such companies usually behave in the same way when dealing with all their investments.
Chart Patterns: Most of the same technical patterns are applicable in both markets as they represent traders' (and computers') behavior when trading.
How They're Different
Always Open: Local market shutdowns take place in the evening and weekends. However, crypto is a 24-hour a day, 7-day a week trader and is therefore in constant operation worldwide, so it can respond to any international news at any time.
Extreme Price Fluctuations: The difference between
cryptocurrency and stock is that the price of the first jumps around a lot more. In 2023, the daily average of Bitcoin price was changed by 3.2%, while the daily average of the stocks that make up the S&P 500 index was just 1.1%.
Rules and Regulations: For a long time, traditional markets have had stable and well-established regulations. On the other side, crypto rules differ from country to country and are still under the process of being figured out.
Market Age: Conventional markets have established and consistent valuation standards and have been around for decades. With the advent of crypto, the valuation aspect is still tricky, and the history is much shorter.
What They're For: Most of the time, the digits underpinning technologies in cryptocurrencies are the same ones that make them successful investments. This fact alone leads to a phenomenon peculiar to the crypto market – a unique way to behave.
One can see such interesting influences found by the CoinMinutes between these markets. For example, if an event such as the stock market falling on a Monday had occurred, we would probably say that Bitcoin was the one that didn't get influenced, remaining steady. However, we could then observe Bitcoin weakening at about 3 AM on Tuesday to become in line with the stock market's move. The revelation was that they were connected but not simultaneous.
The CoinMinutes Cross-Market Correlation Matrix, one of our daily updated platforms where these relationships are dematerialized, is where we can see how traditional and crypto markets are moving together or apart.
Traditional market and crypto market are interconnected
How CoinMinutes Connects the Dots
At CoinMinutes, we help investors understand how economic news affects crypto in several ways:
Looking at Real Connections in Data
We track how economic announcements and crypto prices have moved together in the past. Our research shows:
When real interest rates go up, Bitcoin tends to go down (they have a -0.63 correlation, which is pretty strong)
When the NASDAQ tech stock index does well, Ethereum often does too (0.58 correlation)
Smaller cryptos tend to follow traditional risky investments even more closely during market stress
Knowing these patterns helps predict how cryptocurrencies might respond to upcoming economic news.
Making Sense of Market News
When big economic news breaks, we explain:
What the economic data actually means in plain English
How crypto responded to similar news in the past
Whether the news was better or worse than people expected
Which cryptocurrencies are most affected by this specific type of news
This helps our users understand not just what happened, but why it matters for their crypto investments.
One of our subscribers told us that our explanation of last October's inflation report helped him understand why Bitcoin jumped 5% that day. We explained that lower inflation meant the Fed might ease up on interest rates, which is typically good for Bitcoin. He said that context was much more helpful than just seeing price charts.
Looking at Different Time Periods
We recognize that economic news affects markets differently over various time periods:
Short-term (hours to days): The immediate reaction, often based on emotion and trading algorithms.
Medium-term (weeks to months): The secondary effects as investors move money between different types of investments.
Long-term (months to years): The bigger shifts in how people invest as economic trends become established.
Our analysis separates these timeframes, helping you tell the difference between temporary reactions and fundamental shifts.
Expert Insights from Both Worlds
At CoinMinutes, we work with experts from both traditional finance and crypto. This diverse group provides unique insights into how economic thinking applies to crypto assets.
A recent survey of our experts found that 83% believe the connection between economic factors and crypto
