What will happen when the stock market crashes?

[Tytanowy Janusz]

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.

I agree with you. I only think that average Lambo guy don't know that. He thinks that ETF and BAKKT will safe bitcoin and seeing delisting futures should go and dump his coins. And we didn't see that. That means that there are less weak hands on asset.

[thecodebear]

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.

Thanks

No we definitely have not seen that.

Anytime I've seen people claim that they're like: "look the stock market went down today and bitcoin went down too, they are totally correlated!!" And then like two days later one will go up while the other goes down or doesn't move. One day going down at the same time does not make them correlated. Cherry picking coincidences does not equal correlation.

So far we have not seen any correlation between the two markets so it is impossible to tell what would happen to Bitcoin's price when the stock market starts going down, which looks likely in the next two years.



Three possible scenarios in order of how likely I think they are:

1. Bitcoin may just continue to exhibit no correlation to the traditional markets as it has done throughout its lifetime to the present.

2. People could flee stocks which are at the top of the market and go into Bitcoin since its at the bottom of the market, not to mention since it is a capped currency, with over the long term exploding adoption. That would be the sensible choice.

3. People might just flee into cash away from any investments, especially one they view as high risk like bitcoin.



The reason I rank them in that order is because you have to realize that bitcoin is MUCH smaller than the stock market in terms of participation. Most people who are in the stock market are not in Bitcoin, especially now after the crash. Most people in stocks have never bought bitcoin and likely a very sizeable amount of people in bitcoin aren't in the stock market to any reasonable degree (20-something year olds - studies have shown many young people today would rather buy bitcoin than stocks, so a lot of the people buying bitcoin probably have no stocks or very little) and many of the people who are in both got out of bitcoin over the last year during the crash. Meaning that people who are dropping stock are not gonna be dropping Bitcoin, because they don't have bitcoin. This alone makes #1 and #2 more likely and #3 unlikely. Meanwhile, because of this probably some of those people who are dropping stocks and aren't in bitcoin will pick up bitcoin, most of them won't, but some of them will, which makes #2 more likely. It's possible though that the people who have both and drop both balances out the people who only have stocks and drop them and pick up bitcoin to grow their money while stocks are tanking, in which case #1 would happen and bitcoin would overall just not really be affected by a stock crash.

I don't think bitcoin is large enough or accepted enough yet to have a gold-like "hedge against the economy" boom, so I think #2 will be limited as I don't see suddenly tens of millions of people realizing they should put their sold stock money into Bitcoin which is solid money like gold, maybe in another 10 years from now on the next stock crash but I don't think enough people believe in bitcoin now for that to happen. Which leaves #1 as the most likely - bitcoin will for the most part just continue its own market cycle and will be in a bull market the next couple years booming again in 2021 or 2022.

No matter what happens you don't need to worry. One thing assured is that in a few years bitcoin will be many times more valuable than it is now, whether or not a stock crash affects the bitcoin market cycle or not.

[dothebeats]

I don't quite see the actual correlation between the stock market and the bitcoin market although I always believed that wealth always has to go somewhere. so it'll be either precious metals or crypto in which the money will flow to, but then again, no one has been entirely sure of that. I'd love to get my hands on the data of stock market traders meddling with cryptocurrencies once a full-blown recession happened (which is expected by 2020, by a lot of economists and analysts) and draw a line from there, adding yet another variable on market-cycles if it is really true.

[Romanianz]

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.

indeed cryptocurrency stands alone but you must know that currently from the presence of cryptocurrency news circulating in several media can give the effect of the price of cryptocurrency, so it is not always cryptocurrency price movements always stand alone.

[el kaka22]

Stock market and bitcoin is not as collided as people think. Just because stock market collapsed at the same time as bitcoin doesn't mean they are connected.

Lets take a look at when stock market crashed this year, before stock market crashed bitcoin moved from 20k to 6.5k, way before anything happened on stock market, so that is irrelevant as you can see, after stock market crashed and hit the bottom bitcoin dropped to 3k but that was mainly due to bitcoin cash war that saw Craig Wright selling a lot of bitcoins all at once to drop the price so that is irrelevant as well. As you can see 2018 stock market crash and bitcoin crash actually had no connection at all. Could it go down and up at the same time again? Who knows it could but does it mean they are connected? Not at all.

[thecodebear]

Stock market and bitcoin is not as collided as people think. Just because stock market collapsed at the same time as bitcoin doesn't mean they are connected.

Lets take a look at when stock market crashed this year, before stock market crashed bitcoin moved from 20k to 6.5k, way before anything happened on stock market, so that is irrelevant as you can see, after stock market crashed and hit the bottom bitcoin dropped to 3k but that was mainly due to bitcoin cash war that saw Craig Wright selling a lot of bitcoins all at once to drop the price so that is irrelevant as well. As you can see 2018 stock market crash and bitcoin crash actually had no connection at all. Could it go down and up at the same time again? Who knows it could but does it mean they are connected? Not at all.

exactly. anyone who says the two are correlated hasn't paid that much attention to the actual movement of each.

Bitcoin started crashing as the stock market was shooting up to its top - negatively correlated. Then bitcoin hit a midterm (feb-nov) bottom at 6000 in early feb 2018 the same day the stock market hit a peak before starting to correct / move sideways. Bitcoin then continually bounced off the 6000 bottom while the stock market bounced back off the top (going slightly higher in the summer than the feb peak), so sort of negatively correlated, but really just each moving according to their own separate market fluctuations. BCH hash war then caused a 50% drop in bitcoin in november, stocks completely un-correlated. Since then bitcoin has been range bound at the bottom, while stocks briefly crashed in november only to rally back almost to its peak recently, totally un-correlated.

There is no reasonable correlation between the two. There's only 3 options (up, down, or sideways) so sometimes they do simliar things, sometimes they do different things, sometimes they do opposite things. Things means no correlation between the two.

[David1989]

Stock market and bitcoin is not as collided as people think. Just because stock market collapsed at the same time as bitcoin doesn't mean they are connected.

Lets take a look at when stock market crashed this year, before stock market crashed bitcoin moved from 20k to 6.5k, way before anything happened on stock market, so that is irrelevant as you can see, after stock market crashed and hit the bottom bitcoin dropped to 3k but that was mainly due to bitcoin cash war that saw Craig Wright selling a lot of bitcoins all at once to drop the price so that is irrelevant as well. As you can see 2018 stock market crash and bitcoin crash actually had no connection at all. Could it go down and up at the same time again? Who knows it could but does it mean they are connected? Not at all.

exactly. anyone who says the two are correlated hasn't paid that much attention to the actual movement of each.

Bitcoin started crashing as the stock market was shooting up to its top - negatively correlated. Then bitcoin hit a midterm (feb-nov) bottom at 6000 in early feb 2018 the same day the stock market hit a peak before starting to correct / move sideways. Bitcoin then continually bounced off the 6000 bottom while the stock market bounced back off the top (going slightly higher in the summer than the feb peak), so sort of negatively correlated, but really just each moving according to their own separate market fluctuations. BCH hash war then caused a 50% drop in bitcoin in november, stocks completely un-correlated. Since then bitcoin has been range bound at the bottom, while stocks briefly crashed in november only to rally back almost to its peak recently, totally un-correlated.

There is no reasonable correlation between the two. There's only 3 options (up, down, or sideways) so sometimes they do simliar things, sometimes they do different things, sometimes they do opposite things. Things means no correlation between the two.

Yes, you are right. I was this morning checking charts of both carefully and reached the same conclusion.

In the worst, worst scenario that a crash of the stock markets impacts BTC, average stocks lose around 60%, and taking in consideration that it happens now with BTC at $4000, it could drop to 2000-2500, not a super crash for it considering all time high and potential growth over the next years. I still believe it would go to 100,000 at some point in the future.

[Idrisu]

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

The new bubble may not happen this year but maybe next year as speculators are saying bitcoin halving may likely happen next year!  There is a big correlation between bitcoin and stocks market and those relationships is what we are seeing playing out.

[exstasie]

i honestly have not seen any relation between the two so far in the past years.

There may not be a direct relationship but there's an obvious long term correlation. Ever since the launch of Bitcoin markets, both have remained in a strong bull market. The question is whether/how long this correlation will continue.

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.

All markets are connected, and you better believe when the US sneezes the world catches a cold. This isn't the cold war era anymore. Global markets are incredibly interdependent now, which is why the effects of financial crises spread so quickly from one country to another. It's also why the long term post-2008 S&P500, Nikkei, and DAX charts all look exactly the same.

You think if a major financial crisis and stock market crash wipes out a huge percentage of existing wealth that Bitcoin is just going to remain unaffected? Everyone's going to dump everything except Bitcoin? Why would that be? Especially as Bitcoin investment becomes increasingly mainstream, from average joes to Wall Street?

A stock market crash would be indicative of larger economic problems like growing defaults and unemployment and declining growth. That means across all classes, there is less money for investment and more pressure to liquidate investments (including Bitcoin).

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.

If you're trying to hedge capital, why would you put it into a high risk market? That's just irrational. Money is flowing out from high risk assets to safe havens, not the other way around.

[StephenJH]

Somehow correlation between financial assets and markets will do its job. Stock market --> Spot forex--> Trading Indexes and list goes on. Crypto platforms will be affected if a new form of money flow starts to come towards cryptocurrencies.

[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.

indeed cryptocurrency stands alone but you must know that currently from the presence of cryptocurrency news circulating in several media can give the effect of the price of cryptocurrency, so it is not always cryptocurrency price movements always stand alone.

I just talk about title of this topic, about stock and crypto. If talk about news, i think something that really affect for crypto is news. Because sometime crypto can really hype because of good news and suddenly dumped when bad news come.

[kodtycoon]

well what might happen is a financial crisis, I assume that the impact of an unintentional element is that there is not a correlation between stock and crypto. the difference between the both is very far away, so it can't be matched with conditions that are similar, although sometimes the same

[figmentofmyass]

it depends if it's just a typical equities crash or if currencies are threatened too. in a typical crash, basically everything crashes (including "safe havens" like gold) as people exit to cash. that should apply to bitcoin like everything else---more so, in fact, because bitcoin is such a high risk asset.

if major currencies like the USD or EUR collapse though, all bets are off. then we might see a huge wealth transfer into gold, bitcoin, and other hard assets as people try to hedge against a collapse of fiat banking.

[Ipwich]

well what might happen is a financial crisis, I assume that the impact of an unintentional element is that there is not a correlation between stock and crypto. the difference between the both is very far away, so it can't be matched with conditions that are similar, although sometimes the same

It requires money to invest in stock or crypto and since stocks has a bigger marketcap and they have a lot of investors, it could surely be bad for the stock market and some might find a place where they can minimize their loses or save from that crisis. I am seeing crypto would become a savior, we don't have company and product here, people are using it only for online transaction and with their money poured in the crypto market, it should result in possible effect, who knows it will help us raise the price and get out in this bearish market.

[Pursuer]

bitcoin market is still young and small, so we have no way of knowing how it is going to react to different incidents and we have already seen that there are irrational behaviors in the market from time to time reacting to things they shouldn't react to and going in opposite directions of logically expected before.

I'd say anything is possible but my guess is that two scenarios are more possible than others. bitcoin is either not going to be affected at all and continues on the trend that it was on at the time of stock market crash or it will take a positive effect meaning its rise will become faster.

[Tytanowy Janusz]

Knowing a fact that the average life expectancy for a fiat currency is 27 years interesting things might happened when dollar will be affected by hyperinflation. What would than happened with bitcoin price in $ and other currencies?


According to a study of 775 fiat currencies by DollarDaze.org, there is no historical precedence for a fiat currency that has succeeded in holding its value. Twenty percent failed through hyperinflation, 21% were destroyed by war, 12% destroyed by independence, 24% were monetarily reformed, and 23% are still in circulation approaching one of the other outcomes.

The average life expectancy for a fiat currency is 27 years, with the shortest life span being one month. Founded in 1694, the British pound Sterling is the oldest fiat currency in existence. At a ripe old age of 317 years it must be considered a highly successful fiat currency. However, success is relative. The British pound was defined as 12 ounces of silver, so it's worth less than 1/200 or 0.5% of its original value. In other words, the most successful long standing currency in existence has lost 99.5% of its value. source: http://www.resourceinvestor.com/2011/01/23/time-different-dollar

[needtor22]

I think actually in 2019 I didn't see the stock market fall, because whatever will happen to cryptocurrency prices in the future, I also hope that the stock market in the future will also be fine.

[Naida_BR]

That's an interesting topic that you are raising.
My opinion is that these two markets are totally different (stock market - cryptocurrency market) so it will not behave the same way. I have a strong feeling that when stocks will start crashing, investors will turn their attention to the crypto market in order to stabilize their portfolios.

[Tytanowy Janusz]

That's an interesting topic that you are raising.
My opinion is that these two markets are totally different (stock market - cryptocurrency market) so it will not behave the same way. I have a strong feeling that when stocks will start crashing, investors will turn their attention to the crypto market in order to stabilize their portfolios.

It also depends how hard will it crash. If it will be fallowed be crisis people will be in need of money and will sell bitcoin just to be able to pay for a house or food. Bitcoin was never affected by market crash or crisis. It would be very interesting and informative to watch it closely paying attention to every detail.

[wuvdoll]

Money in the world right now is mostly digital, however money going into bitcoin is not that much digital. For example you can have leverages in stock markets or stuff like that (forex for example) that basically changes hands and something that is already bought could be combined with other bought stuff and it could be bought all again under one name so you bought 100 things and than those 100 things bought together for the 101th purchase however there is 100 things so that 1 is excessive.

Bitcoin is not like that, whatever people have in their bank account is sent directly to exchange and than purchased, which means all 21 million bitcoins when mined will be hold thanks to money that is hard cash not some made up digital numbers system, that is why stock market could crash all it wants, bitcoin will be super safe.