Why Bitcoin's Fall Preceded the Stock Market Crash

Cryptocurrency volatility was a harbinger of the stock market's worst week in years. Tom Lee, an analyst at Fundstrat Global Advisors, acknowledged that Bitcoin's decline was an indication that the stock would be next.

As cryptocurrencies have weakened and investors have pulled out of risky assets, "cryptocurrency price performance could look like stock price performance, as prices move parabolically and then prices start to rise again," Tom Lee told CNBC's "The Trading Nation" last week.

But the relationship between these events is very limited. This similarity suggests that the number of investors has increased, and not that the two assets are somehow related.

“Over the past 12 months, not only have stock prices risen, but the price of cryptocurrencies has also risen. I wouldn't be surprised if those investors who were buying risky assets around the world were also buying cryptocurrency."

Lee believes that the price of bitcoin could rise to $25,000 by the end of the year, but its capitalization will soon be less than the share of all companies on the S&P 500 list - and this is not enough to turn towards the stock market.

"Cryptocurrency has its own economy based on activity in the blockchain network. Stocks have their own economics based on earnings per share ratios. Institutional overlap is practically zero. Companies do not buy cryptocurrency,” says Mr. Lee.

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According to https://www.cnbc.com