If market crashes, BTC will crash twice as hard.

[KTChampions]

I agree with you in general, but why am I forced to sell? If we are talking about investors, then it is unlikely that they bought bitcoin on credit. And they all know about economic cycles and the fact that after fiat money becomes strong, there will inevitably be a period when it becomes weak and asset prices soar. The only ones who will sell at any price are miners, but their influence (if we take the total capitalization of bitcoin) is not very large and is gradually decreasing.

If that were true, asset prices would never drop.

Like you said, the market moves in cycles. At the end of a bullish cycle, this is what happens: profit taking (distribution) and selling because of anticipated lower prices. During trends, prices move in feedback cycles. Lower prices beget lower prices, as the pain of holding losing positions compounds and burnt investors capitulate. This is why downtrends often end with high volume capitulation events. https://www.investopedia.com/terms/c/capitulation.asp

Even if you don't feel forced to sell, others will because of the pain of holding or the need to liquidate for cash (this is an economic crisis we're discussing after all), or because they think they can buy back lower. This all produces increased supply on the market, which pushes prices down.

This is true for highly liquid assets with huge capitalization such as oil, real estate, stocks, etc. It seems to me that niche/low-cap/unique markets react differently. Goods from these markets were initially bought for a long time, and most of the investors in these goods initially assume that the period before its sale may be 1-2 (or more) economic cycles. I have not heard that someone "urgently" sold a unique painting just to get into the cache (this happens in bankruptcies, but this is a different case).
I think bitcoin is close in characteristics to niche/low capitalization markets therefore, here we are unlikely to see a repetition of the stories of the stock market or the real estate market.

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[exstasie]

If that were true, asset prices would never drop.

Like you said, the market moves in cycles. At the end of a bullish cycle, this is what happens: profit taking (distribution) and selling because of anticipated lower prices. During trends, prices move in feedback cycles. Lower prices beget lower prices, as the pain of holding losing positions compounds and burnt investors capitulate. This is why downtrends often end with high volume capitulation events. https://www.investopedia.com/terms/c/capitulation.asp

Even if you don't feel forced to sell, others will because of the pain of holding or the need to liquidate for cash (this is an economic crisis we're discussing after all), or because they think they can buy back lower. This all produces increased supply on the market, which pushes prices down.

This is true for highly liquid assets with huge capitalization such as oil, real estate, stocks, etc. It seems to me that niche/low-cap/unique markets react differently. Goods from these markets were initially bought for a long time, and most of the investors in these goods initially assume that the period before its sale may be 1-2 (or more) economic cycles. I have not heard that someone "urgently" sold a unique painting just to get into the cache (this happens in bankruptcies, but this is a different case).

Bankruptcies happen for the exact same reason. It's only a matter when the assets are liquidated.

In broad strokes, these assets act exactly the same. This boils down to economic rationality. It doesn't matter if you invested in fine art or real estate. When the economy crashes and your business fails or you lose your job, you may need to liquidate assets to pay your mortgage or rent, bills, etc. This is the part of the underlying drive towards cash during liquidity crises.

This idea that people who invest in stocks or real estate need cash, but people who invest in low-cap or niche markets don'tdoesn't really pan out for me.

I think bitcoin is close in characteristics to niche/low capitalization markets therefore, here we are unlikely to see a repetition of the stories of the stock market or the real estate market.

And yet Bitcoin crashed much harder than stocks or real estate this past March. Makes you wonder......

[KTChampions]

This is true for highly liquid assets with huge capitalization such as oil, real estate, stocks, etc. It seems to me that niche/low-cap/unique markets react differently. Goods from these markets were initially bought for a long time, and most of the investors in these goods initially assume that the period before its sale may be 1-2 (or more) economic cycles. I have not heard that someone "urgently" sold a unique painting just to get into the cache (this happens in bankruptcies, but this is a different case).

Bankruptcies happen for the exact same reason. It's only a matter when the assets are liquidated.

In broad strokes, these assets act exactly the same. This boils down to economic rationality. It doesn't matter if you invested in fine art or real estate. When the economy crashes and your business fails or you lose your job, you may need to liquidate assets to pay your mortgage or rent, bills, etc. This is the part of the underlying drive towards cash during liquidity crises.

This idea that people who invest in stocks or real estate need cash, but people who invest in low-cap or niche markets don'tdoesn't really pan out for me.

In a sense, you are right, but still, I believe that the bitcoin market is very far from a rational market due to low capitalization, the presence of large players (whales), etc. Obviously, this is far from a "theoretical" rational market where we must always see the effective / fair price of an asset.

So...

And yet Bitcoin crashed much harder than stocks or real estate this past March. Makes you wonder......

yee, that time everything went like this (by the way, the market recovered faster than the stock market), but maybe next time everything will turn out differently.