What will happen when the stock market crashes?

[David1989]

Hi everyone,

I have been reading a lot about correlation between stock market and crypto. As we have seen in recent months, when the stock market crashes, BTC follows.

BTC seems like have bottomed after more than 85% crash from $20,000 and, comparing with past bubbles like the previous one when the price topped at $1200, everyone think that BTC will have another similar bubble. But that happened in one of the longest bull cycles in stock market. This time, the potential run for crypto would have to happen in the middle of very probable bear market for stocks and nobody knows how BTC will be affected by it.

Some think BTC will raise because people will take it as Gold and as a reserve of value. Other think that it will fall as well because of the panic selling and people only wanting to have cash in hand...

What's your opinion about this?

I believe it could be a huge obstacle in the run to $100,000 in this new potential bubble...

Thanks

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[BurgerCash]

It will be interesting to see for sure.
On one hand we can guess based on gold's performance back then - which was absolutely nothing special.
On the other - it would take significantly less fiat money to substantially bump BTC.
Definitely holding crypto until it happens, even if BTC is a negligible portion of my portfolio.

[Zadicar]

What's your opinion about this?

I believe it could be a huge obstacle in the run to $100,000 in this new potential bubble...

Thanks

Theres no correlation between crypto and stock market.The thing you do look at that both crashes is just pure coincidence and has nothing to do for them to be connected.
We can presume that funds on stocks might go to crypto yet its plausible but there are not news nor rumors that it would happen.

[DooMAD]

When wealth is threatened, people generally make reactionary and unpredictable moves.  If anyone here could tell you with any certainty how it would affect Bitcoin, they probably wouldn't, because it might impact the profit they could potentially make by reading the market correctly.  Just place your bets and hope for the best.  

[mich]

When wealth is threatened, people generally make reactionary and unpredictable moves.  If anyone here could tell you with any certainty how it would affect Bitcoin, they probably wouldn't, because it might impact the profit they could potentially make by reading the market correctly.  Just place your bets and hope for the best.  

This is very true such that "panic selling" is one of the biggest problems when the market is down.
People tend to do the same thing with crypto and freak out rather then just turn off your computer and live another day.
Better to be in this for the long-term reward then just the sudden wealth mentality.

[Biodom]

I think that if stock market truly crashes (50-60%), then btc would crash as well.
It would probably recover first, though.

Here is a market crash scenario that is currently my favorite:
https://www.tradingview.com/chart/SPX500/aTlHFwTp-2019-The-year-of-the-Benner/

Note that he posted it on Dec 8 and predicted the bounce from mid Dec to today very nicely.

[pooya87]

i honestly have not seen any relation between the two so far in the past years. and that mainly is because bitcoin is NOT connected to any other market and has always been a separate thing and not to forget "global" not limited to one country only.

the only thing that lately has led people to say "if stock market crashes bitcoin follows" is the recent drops in stock market that coincided with bitcoin drop but they are all missing the fact that bitcoin was already on a downtrend and it would have happened anyways.

if anything bitcoin should rise up if stock market crashes, exactly because as i said it is  a completely separate market and when one market is crashing investors always look for alternative investments to save their money. bitcoin may not be the best option (because of its high risk) but it certainly is an option.

[adaseb]

People have been assuming the stock market is going to crash since 2010. Lately all over the social media targetted towards investors and on CNBC they are saying that some recession is coming soon due to the negative yield.

Let me tell you one thing, if it was that easy to prove when a recession will start then my Grandmother would be trading some stock puts options.

Everyone is trying to catch a stock market crash and shorting the top which is no different than the people buying BTC at $6000 expecting to catch the bottom. If a stock market crash, it will come when you least expect it.

[NeuroticFish]

Although a market crash is to be expected - because of market cycles, because many things go wrong.., this is 100% correct:

Let me tell you one thing, if it was that easy to prove when a recession will start then my Grandmother would be trading some stock puts options.

How Bitcoin will react depends on the timing. Right now Bitcoin market looks weak and there may be quite a blow.
Normally it should be 0 effect on long time. Maybe a bit of rise overall.
The history is always the same, no matter what's the trigger: The ones with vision will buy and make the price rise. Others will sell because they need the money. The price rise will attract speculators and FOMO newbies. The ones who know the market will, as usual, sell. Then the rest will, again, try to repair the damage.

[Gaff]

Economic devastation could arise and will pull down the economy of a particular country, and fiat economy will decline which caused more trading to decline each and every assets. Many stock holders will become panic, once there's crash happening that's why stocks exchange has to be regulated and maintained by bigger investors. Also to add up here, some investors will consider crashes as an opportunity for them invest while every particular stocks became cheaper to buy.

[jakelyson]

If the market crashes, we will resort to cryptocurrency to protect our cash. I think you are right when you said that we will treat bitcoin as gold when the market crashes.

Bitcoin was born when the market collapsed in the 2008 recession. And most of us learned from that already. So if some signs of market collapse appear, we already know what we will do.

[magneto]

Hi everyone,

I have been reading a lot about correlation between stock market and crypto. As we have seen in recent months, when the stock market crashes, BTC follows.

BTC seems like have bottomed after more than 85% crash from $20,000 and, comparing with past bubbles like the previous one when the price topped at $1200, everyone think that BTC will have another similar bubble. But that happened in one of the longest bull cycles in stock market. This time, the potential run for crypto would have to happen in the middle of very probable bear market for stocks and nobody knows how BTC will be affected by it.

Some think BTC will raise because people will take it as Gold and as a reserve of value. Other think that it will fall as well because of the panic selling and people only wanting to have cash in hand...

What's your opinion about this?

I believe it could be a huge obstacle in the run to $100,000 in this new potential bubble...

Thanks

Short term, it is possible. I don't think there is a particularly strong correlation, though the entry of institutional investors into the market could make this somewhat different in the future as they may hold positions in both stocks and bitcoins.

But long run, especially when considering bitcoin's internal market cycles, I wouldn't take into what the stock market is doing as something that bitcoin will mirror/inversely follow. It's just two different things. You're comparing a currency, which has no central entity, to equity of businesses whose primary goal is profit maximisation.

Correlation doesn't mean causation. It's probable after a certain period of time that you'll see correlation between any markets, and that doesn't always link them together somehow.

[Tytanowy Janusz]

There are 2 scenarios.
1- during market crash investors very often move their investment from high risk to low risk (stocks to gold). In that scenario bitcoin will drop due to its high risk asset.
2- bitcoin was made during market crash for all of those pissed off at the present monetary system. Perhaps during next market crash their feeling will be renewed and will see pump.

We need to remember that we are already dumped. There is not much space for further price falling due to lack of weak hands. Last news about delisting bitcoin futures from CBOE did not move the price.


I would not call bitcoin gold yet.

[Wilhelm]

If there is a correlation it will be between the devaluation(inflation) of fiat and the deflation of Bitcoin.
And correlation is not proof.... 

Next you will be correlating sunspots with the temperature of your pasta....

[David1989]

I've been now comparing charts of BTC with Dow Jones, and the better correlation I see is on late 2018 when the Dow lost 20% that was when BTC lost support at $6xxx and fell to $3xxx. But if you look closely, Dow started to plunge in late August and BTC was not affected until mid November. I think that the fall to 3k in BTC was going to happen yes or yes, independent of stock market crash.

I have checked also the Dow correction in 2015 and it didn't have any impact on BTC, that hold the bottom at $250.

In fact, none of these have been big crashes of the stock market, just corrections, but checking them, I'm not sure that they both are correlated as many people think...

Regards

[BitHodler]

We need to remember that we are already dumped. There is not much space for further price falling due to lack of weak hands. Last news about delisting bitcoin futures from CBOE did not move the price.

People didn't pay attention to CBOE halting their Bitcoin futures due to their poor volumes. Doing $4-$5 million a day in volume is well below what a trashy exchange such as Yobit generates.

I strongly believe that right now most of the weak hands are out already. What we are left with are those who are still in doubt but firmly hold just because they think that's the right thing to do because people say so.

It may require one more flash dump to make even these people unload their coins to get rid of what is left in latent selling pressure. The price re-testing its December low will very likely do it.

[The Sceptical Chymist]

As we have seen in recent months, when the stock market crashes, BTC follows.

I don't think this statement is necessarily true--the stock market hasn't crashed recently.  It's had a correction, yes, but it has not dropped nearly as much as bitcoin has from its all-time high.  If the stock market lost 90% of its value in less than a year and didn't rebound, it would be front page news all over the world.

The Dow Jones Industrial average is still above 25k (had to check on that), so the little drop it saw over the last month or so wasn't even that significant--I don't even know if you could even call it a correction.  But I do think that if we had some sort of crisis that caused stock markets around the world to tank, bitcoin would likely drop along with them.  Usually when markets sink, it's because the economy is in trouble.  When that happens, investors tend to flee to safe-haven assets like gold & silver.  Bitcoin definitely is NOT a safe-haven, so my guess is that traders would sell off bitcoin just as quickly as they would their stocks. 

Yet I stick with my assertion that such a correlation does not have to be true.  Bitcoin obviously dropped a hell of a lot on its own, and thus it isn't necessarily tied to the stock market's performance.

[fabiorem]

If the stock market crashes, bitcoin will go to Jupiter.

The money need to go somewhere, and investors would hedge in BTC.

[DooMAD]

It would be an interesting metric if we knew what percentage of stock market investors also held BTC.  

My assumption would be that for those who don't already hold BTC, a sudden stock market crash is unlikely to make them take a punt on something they aren't already familiar with.  As others have mentioned, precious metals would be a more likely route for them.  But those that do hold BTC already may be more inclined to move a greater proportion of their wealth into Bitcoin if the stock market began trending downwards.

[ShowOff]

Actually i am not see correlation about stock market and crypto. Because crypto stand by itself. But maybe if people, a lot of people loss much in stock market because of crashed, maybe they can start to look at crypto or maybe not believe trading online anymore.