President Trump seems to be trying to pump the stock market further through an elated tweet he posted earlier today. Let’s not forget that Bitcoin’s price also tends to follow stock market booms.
Bitcoin has had a long-standing relationship with the stock market. In fact, S&P500 rallies have been closely correlated with Bitcoin’s own rallies.
The opinion may be unpopular, but it’s nonetheless true. As Tom Lee of Fundstrat has repeatedly said on CNBC and elsewhere, when stocks go up so does Bitcoin. “Once equities break to an all-time high, Bitcoin becomes a risk-on asset,” he said back in September. In effect, the stock market will have to continue to trend higher if we are to see Bitcoin break its previous all-time high of $20,000. It’s simply too young of an asset to survive a financial meltdown, but the jury is still out on that.
However, it seems like momentum is building for the stocks to push even higher albeit for all the wrong reasons. President Trump tweeted today about the stock market like he was writing for a pep rally. He clearly wants to pump the market further.
STOCK MARKET AT ALL-TIME HIGH! HOW ARE YOUR 401K’S DOING? 70%, 80%, 90% up? Only 50% up! What are you doing wrong?
— Donald J. Trump (@realDonaldTrump) January 9, 2020
It’s obvious President Trump is excited about the stock market breaking records, but we’ve never seen a president cheer it on like this before. Trump is, in effect, trying to pump the market which has caused some to wonder if we are amidst a bubble.
As one Twitter user and apparent Bitcoin enthusiast, Hernz (@hernzzzzzz) says, we are in the euphoria stage.
Euphoric stage👀 pic.twitter.com/oMza74qNFF
— Hernz (@hernzzzzzz) January 9, 2020
Still, it can’t be denied that a strong stock market is good news for Bitcoin. So, in the short-term, the diagnosis looks strong. However, the long-term predictions for the stock market look uncertain—and Trump’s pep talk certainly doesn’t provide investors with much confidence.
With 2020 looking to be a strong year for markets – and possibly Bitcoin – the inevitable future recession just may be put on hold for another year. Then again, you can’t predict black swan events so we should be cautious.
Images courtesy of Shutterstock, Trading View and Twitter.