What Happens To Crypto When The Stock Market Crashes?
The American stock market has been on a monstrous rise since before Bitcoin was created, what happens when it crashes?
This is a tough question. The crypto and stock market are two different beasts. The obviously much larger stock market has gained all the losses after the 2007/8 crash and has set record highs the last 9 days strait. It is pretty amazing, but everyone from Tony Robbins to Warren Buffet have warned of a major pullback or crash happening soon.
Traditionally August and September are two bad months for the stock market and October has been the month that the largest crashes in history started. How far up will the market go before we see a major sell off? It is over 22,000 right now which is incredible.
The crypto market is an entirely different animal. It is new and doesn't have a track record to follow like the stock market, but it seems almost entirely built on the strength of Bitcoin.
With the recent fork for Bitcoin, and the incredible rise to over $3,300 it proves that Bitcoin is strong and isn't showing too many signs of slowing down. If Bitcoin remains strong, I think the crypto market stays strong.
With a strong crypto market, stock investors who are getting nervous about a crash or major pullback might consider investing in crypto instead of other commodities or bonds. With the bond market on shakey ground, gold and silver will still look good, but crypto has to garner some attention.
If the crypto market becomes a safe haven for major stock investors during time of uncertainty the we could see some incredible gains if the stock market starts to fall.
(all gifs from www.giphy.com)
I have heard many say that the crypto market is tied to the stock market and that may have been true a year ago or so, but right now, I think the crypto market has at least come into it's own enough to grow independently of the stock market and could see a major spike if stocks fall.
That is just my analysis and I'm not a professional financial advisor, just someone who studies the markets and sees real opportunities for all of us involved in crypto.
What do you think will happen to the crypto market when the stock market crashes?
I think it's likely that the crypto market will go up if the stock market goes down. If people are pulling money out of the stock market, they'll want somewhere to put it and I think it's likely a good number of them will choose Bitcoin and other crypto-currencies.
certainly the crypto will benefit from a stock market crash, as the money has to go somewhere else. But some older people or the people who don't understand much about computer and technology might now want to put money in crypto, so i think those people would choose precious metals
I agree, my point exactly. I hope that is the case. Thanks for reading.
You got a new follower.
great view..
When stock market crashed in the past, the money went to precious metals. But the last crash was 2008, and there were no cryptos back then. I would put money on PM and cryptos for the next crash. I have a hard time explaining cryptos to people i know, and most of people still don't own any. When a crash happen it's unlikely those people would run to cryptos, so might be precious metals again
No clue. Bitcoin emerged in 2008, so it is kinda related to the financial disaster, right?
Yes and no. Bitcoin would have been created regardless at some point, but the timing seems fortuitous. Since it's creation the stock market has gone up from the lows of the crash. Bitcoin's price has moved independently since according to charts. The 2007/8 crash is part of cyclicly crash system that looms over our credit based economy.
Great article. This is the big question for any crypto investor in my opinion, can crypto thrive as the traditional market bubble pops. I think it depends on how severe this upcoming market crash is and there's a very wide spectrum of views on this. I know one thing though, as we head into unchartered waters I'd rather have as many lifeboats ready as possible and crypto's seem sea worthy so far to me ⛵️
Crypto has gotten to a point where it's probably a great alternative to the usual rush to gold when the stock market crashes.
I'd say people might look into crypto more if the market does take a nosedive...but also...since it's not the most stable of markets yet, they also might shy away from it.
Only time will tell though...
consider the crypto market to be the airbag for the (supposedly) coming crash.
I think it already is a safe haven for many of us involved in it. I'm new to crypto but I'm keepin my Steem. If anybody thinks this stock market isn't juiced to the gills right now...I want whatever drugs they're takin! When it comes down, I'm gonna buy up & make money.
I have recently liquidated much of my stock portfolio, partly to buy more rental property and partly to invest in crypto. I also plan to borrow from my 401k for a rental property. Lastly, I am looking into whether I can buy crypto in another of my 401ks. I am hoping this will be enough of a hedge as I still have two large retirement accounts in stocks and bonds.
you can use GBTC as a proxy for cryptocurrency and compare it to S&P500 or long term treasuries on Yahoo finance. Its hard to see any correlation or inverse as the crypto is so noisy the other two just look flat.
https://finance.yahoo.com/chart/GBTC#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%3D%3D
There is absolutely no way to know that. It may go up or down depending on the pattern it is completinng. If you think about it, you cannot say what will happen even to the dollar or gold. Counterintuitively, the dollar often rose and gold went down during stock market corrections.
No one knows, but: precious metals also rose. I would bet cryptos will rise too.