Bitcoin was invented in 2009, and that has been a great year for bitcoin but not a great year for the stock market of the United States as it all begins an unparalleled bull market that is continuing till now. There are always murmurings in the market about the crash, and the noise of such murmurings always gets loud. Covid-19 has also proved the potential of bitcoin, and the stock market is pushing itself harder that is backed by the government. But when quantitative policies aren’t implemented, is it justified for the stock market to crash?
If it is possible, it can bring destruction to the bitcoin trader. In fact, the correlation between stocks and bitcoin has become one of the main topics of argument in the financial world. What will happen to bitcoin and other cryptocurrencies if the stock market crashes?
Can the stock market crash?
To learn about the stock market crash, let us take cryptocurrencies or the market out of the picture for one. The skyrocketing speculation that a crash is about to happen has some value. The inflation rate across the world, especially in the U.S., was more than expected in June 2021. During this time, the government decided to accumulate more debt and issue bonds to a point and discussed that there is a need to raise the debt ceiling.
The reason behind this is the covid-19 pandemic relief effort. The U.S. stock market indicated that there was no need for relief when the government continued to pump money into the economy. The real estate markets of the U.S. are also increasing even after the Federal Reserve showed their concerns that institutional investors are increasing, which referred to an appetite for stocks and digital assets. The money that the government is pumping into the economy has to dry at one time, and its consequences can be a crash of the stock market.
Are the stock market and bitcoin price correlated?
The main question that arises here is, are bitcoin and stock market-linked or linked in 2020? The narrative of the crypto market was that most investors were surprised to notice how bitcoin’s price behaved. But it is assumed that bitcoin and stocks are not correlated, and it would be a hedge against precious metals like gold and stocks.
In history, it has been seen that the crypto market will follow when there is a crash in the stock market.