After a nice bullish streak, the Dow Jones Industrial Average has had a rough couple of weeks. The cryptocurrency is also experiencing a correction. Could there be a correlation between the two investment worlds?

We must be careful to use vague terms like “bull and bear markets” when crossing into each investment space. The main reason for this is that the cryptocurrency over the course of its incredible “bull run” of 2017 posted gains of more than 10 times. If you put $ 1,000 into Bitcoin in early 2017, you would have made more than $ 10,000 by the end of the year. Traditional equity investing has never experienced anything like this. In 2017, the Dow was up about 23%.

I am very careful when reviewing data and graphs because I realize that you can make the numbers say what you want them to say. Just as cryptocurrencies made huge gains in 2017, 2018 has seen an equally rapid correction. The point I am trying to make is that we should try to be objective in our comparisons.

Many of those who are new to the field of cryptocurrencies are shocked by the recent collapse. All they’ve heard is how all these early adopters were getting rich and buying Lambos. For more experienced traders, this market correction was quite obvious due to the skyrocketing price increases over the past two months. Many digital currencies recently turned many people into millionaires overnight. It was obvious that sooner or later they would want to take some of that profit off the table.

Another factor that I think we really need to consider is the recent addition of Bitcoin futures trading. Personally, I think there are significant forces at play here led by the old guard who want to see cryptocurrencies fail. I also see the futures trading and excitement around crypto ETFs as positive steps in making crypto mainstream and considered a “real” investment.

Having said all that, I began to think, “What if there is somehow a connection here?”

What if bad news on Wall Street affected crypto exchanges like Coinbase and Binance? Could you make both of them fall on the same day? Or what if the opposite were true and caused cryptocurrencies to surge as people looked for another place to park their money?

In the spirit of not trying to skew the numbers and being as objective as possible, I wanted to wait until we saw a relatively neutral playing field. This week is as good as any other, as it represents a period in which both markets experienced corrections.

For those who are not familiar with cryptocurrency trading, unlike the stock market, exchanges never close. I have traded stocks for over 20 years and I know very well that feeling where you are sitting on a lazy Sunday afternoon thinking:

“I really wish I could trade a position or two right now because I know that when the markets open, the price will change significantly.”

That Walmart-like availability can also elicit knee-jerk emotional reactions that can snowball in either direction. With the traditional stock market, people have the opportunity to hit the pause button and sleep on their decisions overnight.

To get the equivalent of a one week cycle, I took the last 7 days of crypto trading data and the last 5 for the DJIA.

Here’s a side-by-side comparison over the past week (3-3-18 to 3-10-18). The Dow (because 20 of the 30 companies that consists of losing money) decreased 1330 points which represented a decrease of 5.21%.

For cryptocurrencies, finding an apples-to-apples comparison is a bit different because there is technically no Dow. This is changing as many groups are creating their own version. The closest comparison at the moment is to use the top 30 cryptocurrencies in terms of total market capitalization size.

According to coinmarketcap.com, 20 of the top 30 coins fell in the previous 7 days. Sounds familiar? If you look at the entire crypto market, the size dropped from $ 445 billion to 422 billion. Bitcoin, viewed as the equivalent of the gold standard, saw a 6.7% decline over the same time period. Usually when it comes to Bitcoin, go for altcoins.

Coincidence or causality? How come we saw almost similar results? Were there similar reasons at play?

While the price drop appears to be similar, I find it interesting that the reasons for this are very different. I told you before that numbers can be misleading so we really need to remove the layers.

Here are the top news items impacting the Dow:

According to USA Today, “strong wage data sparked fears of upcoming wage inflation, intensifying concerns that the Federal Reserve may need to raise rates more frequently this year than the three times originally targeted.”

Since cryptocurrencies are decentralized, interest rates cannot manipulate them. That could mean that, in the long run, higher rates could lead investors to invest their money elsewhere in search of higher returns. That’s where cryptocurrencies could come into play.

If it wasn’t interest rates, what caused the crypto correction?

It is mainly due to conflicting news from various countries on what their stance will undoubtedly impact the market. People around the world are unsure whether or not countries will allow them as a legal investment.

This past week saw some favorable news from the testimonies in Congress from Jay Clayton (SEC Chairman) and Christopher Giancarlo (CFTC Chairman). The feeling was that while they wanted to eliminate bad players and ensure AML laws were followed, they also wanted to allow innovation.

Certainly, it seems that the connection in similar results between the two worlds is uncertain.

We all know that markets don’t like uncertainty. But the uncertainty is temporary. What causes worry one day can sometimes be resolved overnight. There are also times when the news is so shocking that it paralyzes the market for several months and even years.

The key is to examine all this information and figure out what is real and what is not.

Because I have a lot of interest in both stocks and cryptocurrencies, I think keeping a close eye on both can be quite rewarding. The opportunity to make a profit exists almost every day. This is especially true in cryptocurrencies as I often bought a coin that fell 30% the day before and then fell another 30% the next, but I got all of that back and more in a week.

I would recommend staying as diversified as necessary (this varies with each individual’s situation). There are days when one is up and the other is down. For a morale boost, it’s nice to have the option to log into the account that had the best day. If you have accounts in both worlds, maybe you can relate to this.

One thing is for sure, cryptocurrencies are here to stay and will definitely make investing more interesting.