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rapsey | karma 4717 | avg karma 2.77 · 2022-11-14 08:08:43

Crypto very much follows the stock market. Interest rates are inversely correlated to stock market performance. After 2008 the stock market went into the longest bull run in history which has now reversed this year. Stock market is down and crypto is collapsing because it is the wild west. There are for sure going to be multiple exchange collapses not just FTX.

andruby | karma 4475 | avg karma 4.21 · 2022-11-14 09:36:30

> Crypto very much follows the stock market.

Is that based on observing a correlation between both or is there an underlying hypothesis/theory/mechanism why crypto follows the stock market?

I'm genuinely curious, not trying to imply this isn't the case.

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tome | karma 8885 | avg karma 1.75 · 2022-11-14 09:56:15

I assume the hypothesis is that people threw cheap money into both. Now cheap money is over, people are withdrawing from both.

rapsey | karma 4717 | avg karma 2.77 · 2022-11-14 10:23:56

Both. It follows it observably and the reason it does is because with low interest rates there is an excess of capital. Money is too cheap so it flows into speculative asset classes like stocks and crypto.