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It won’t be the reason why Bitcoin will crash if stock crash. Sure it makes sense for funds who want to show a quarterly profit they will sell their winning positions to look good if they had too many losing positions, however this is a small percentage.

Go and look at the correlation right now with the nasdaq index, it follows it very closely. We got tons of earnings out soon and if they are bad then crypto will be affected also because all those correlation traders will start to dump when stocks are dumping.

I think we just need to zoom out. Perceived correlations between Bitcoin and indices such as the Nasdaq or S&P 500 have occurred only over short periods of time. If we take long periods, of at least one cycle, we see that there is no such correlation but small coincidences.

Regarding this year, we have not yet seen a crash per se, but we have seen a downturn and bear market, although it was to be expected in the stock market after the recent returns. If there was a crash such as a 30/50% drop from where we are in a short period of time, I believe that Bitcoin would also go down, but that as happened with the coronavirus, the subsequent rise would be much higher than that of the stock market and other assets.

Today is proof how correlated Bitcoin is for nasdaq. When it was confirmed that Musk bought Twitter it rallied along with the nasdaq 100. Pretty much correlation very close at 90% or so. This is what has been happening pretty much since the start of covid and will be this way for a while.

Right now I have no idea what will happen with stocks. They should go down however everybody is calling for a recession and most likely that won’t happen. So there is a good chance they bottom somewhere where nobody is expecting. Also many stocks are like 80% from ATH pretty much. Many already capitulated like with Facebook and Netflix.

While I am expecting crypto assets to follow the movements of stocks when a significant movement happens, I also am more leaned on the idea of bitcoin being a protective asset having the same reasoning as what OP mentioned. This is how I am seeing it : short-term, big movements on stocks will affect crypto assets mainly bitcoin. Long-term, little to no affect or would more likely push bitcoin further up. Still though, I am not sure enough with this thus I do not bank on it that much yet. What I plan to do for now is slow investing and observe.