Topic: When traditional markets fall, alternative markets fall harder (Read 342 times)

Exactly, that's what I think a lot of people here don't consider. There's a huge psychological component to market cycles. If everything is crashing, everybody (and retail investors in particular) will be running for the hills.

A major economic downturn isn't characterized by, "Would I rather invest in x, y or z? Which has the strongest fundamentals?" It's characterized by everybody selling everything. The riskier the asset or the more inflated the market, the worse you should expect.

Next year is certainly going to teach us a thing or two.

And the correlation with conventional markets counts when it comes to psychology above all else. Crypto can soar off the back of wider confidence. When that evaporates I don't think there's enough faith in crypto itself yet to sustain it alone.

The majority are in it for more dollars. The people who have a real use for it can still use it at lower values. I'd love to be wrong. We'll find out relatively soon.

It's #2. Bitcoin is still experimental. It's versioning implies it's still in beta (and Core developers have said as much). It's only just reaching 10 years old. That's quite unproven. How could you expect the world to view it like gold? And remember, gold crashed in 2008 along with the rest of the market! There's no such thing as the perfect hedge. The flight will be to cash first and foremost.

A major economic contraction means every actor in the economy has less cash to invest (on average). Unemployment rises, consumer and investor demand dries up as people focus on bare necessities. Why would this be good for Bitcoin or any other speculative asset?

Bitcoin's supply is currently inflationary, which means there is already consistent supply that needs to be absorbed to maintain the current price. We're talking about a context where demand should decrease as well (for the same reason that demand for virtually all speculative and investment assets will decrease).

Everywhere I go and every website I visit, everyone is saying that the stock market is crashing, its not.

Its basically correcting from the bullish year that 2017 had, and since Trumps election. I am thinking that we will trade sideways for a year or so with the equities market before it starts to revisit the ATH.

What happened in 2008 was differerent. People working at Mcdonalds had like 3 mortgages which they couldn't afford and it resulted in the subprime lending crisis, right now we don't have any situation as remote as that.

For me your argument looks flawed at the very beginning. How can you compare market who has existed for almost a century now against a market like crypto who just barely touched a decade? So it's difficult to say what will happen to crypto at this point, sample data is so small that is hard to see where the price would be in the next 5-10 years. Let the market mature, and as far as the tulip bubble comparison (again?), just because an asset like Bitcoin is following the path of tulip mania (as others may have suggested) it doesn't mean that they're the same.

.com stocks never came back? What are Yahoo and Google then? They look pretty healthy to me, all things considered.

And we're only looking at the S&P as a marker for depression? Don't forget, Bitcoin was born out of the ashes of the last global economic crisis, that completely demolished old economies like Greece, crippled many others. And yes, the latest Great Depression is hitting the West but these were old diseases, with the stock markets merely displaying symptomatic trends of a chronically ill foundation.

Need the old hosts to die completely before money moves on.

The only arguments that I see as valid aganist Bitcoin during a 2008-type clusterfuck unfolding on the near future that i think of right now:

1) Cost of electricity becomes higher due the recession. Im not sure at all how this can be the case, but let's say it gets more expensive. It would need to be a global event to have a real impact on the hashrate. Even with a big loss of hashrate Bitcoin's network is extremely secure at this point. It would be way more convenient than gold specially if you need to cross any borders.

2) Since it's still a new asset, people don't trust it enough and a big amount sells to buy whatever else.. but what is this whatever else that is neutral and decentralized other than gold? and who would be stupid enough to not have some Bitcoin in any case

So yeah, not even valid points.

Well. Bitcoin was made during crysis for people furous about monetary system that made crysis. Cryptos will be during this crysis saying "look what traditional monatary did", "you said cryptos are unsafe? Now you know that your founds in bank are unsafe too". In my opinion it will only bring more attention to crypto rather than "kill crypto".

Also dont compare tulips to crypto. Crypto has actual value created not only from speculation. I wont to have some on my money out of system and still be able to use them, transfer and pay from them (what only crypto gives me) and i think that there are a lot of investors with similar thoughts.

Crysis will show other what we crypto investors know from 2009. Founds in banks are unsafe. And as you said. This is first crysis with crypto around. Thats why we dont know what will happend and bull run during this time is as possible as huge dump to below 1000$ area.

Correlation isn't about how similar two assets are. It's about how similarly their prices move. Stocks are obviously a different type of asset, but what matters for correlation is that both stocks and Bitcoin represent investments. People buy both types of asset to speculatively profit, draw returns, or to beat inflation. So while we shouldn't expect the stock market to cause price changes in Bitcoin, we should expect both markets to react to variables that could cause a flight to cash and away from risky investments. A financial crisis like 2008 could result in that kind of situation.

Firstly, I think that there is very little tangible correlation between the traditional stock markets, and bitcoin. They are simply operating in two completely different fields here, stocks represent equity in a company, while bitcoin has the utility of facilitating transactions without intermediaries, as well as a coded in supply curve which can't be manipulated.

That's ultimately what makes bitcoin valuable, and why it's different from the tulip mania. There is tangible evidence that this type of store of value that bitcoin offers is needed within the economy, especially when other stores of values like gold and silver are so bulky and inconvenient.

As herbert mentioned, the two events that you pointed out (bitcoin going up and stock markets going up) could be just completely coincidental and they probably were. There could well be a stock market recession coming very soon, but I doubt it will hit hard on bitcoin. It simply doesn't have any stake in the traditional economy given its independence.

no, you are wrong and you don't have enough evidence to support your claims. all you have is only one case of both markets going down at the same time which looks more like a coincidence than any actual connections.
additionally your whole logic about "bitcoin never been inside of any recession period so it should fall in a recession" is wrong. all you can say is that since we don't have any prior case to compare it to anything is possible. price may rise to the moon in a recession or drop harder than everything else, both are equally possible.

You're right. It's true that Bitcoin has never experienced a recession or depression. Nobody knows what will happen.

The thing is, the current "plunge" in the stock market is quite small compared to crashes like 2008. We're still in the range of the 2011 stock market correction in terms of volatility. Bitcoin mirrored the stock market in 2011 on the way up and the way down. I wouldn't be surprised to see a violent bounce in equities as we enter the new year, consistent with the recent bounce in BTC.

that is a theory that you came up with but it doesn't make much sense if you think about it.
bitcoin is not just some stock that you buy in your country to make profit. bitcoin is a global currency with a global market. and most importantly bitcoin has nothing to do with traditional markets.
prove me wrong and show me an actual relationship between bitcoin and stocks apart from price? well you can't because there is none! and that is why your "theory" doesn't make any sense.

Same old analogies I've seen since ages ago. "Bitcoin could be the MySpace of crypto", "Bitcoin is old with rusty tech", "only 7 tx per second".

You should understood by now the fact that Bitcoin is about sound money, not the amount of on-chain transactions it can do, mainly because there isn't any competing alternatives that improve on this without giving away decentralization. There aren't more efficient systems. No other system is as solid as PoW and thus no other network is as powerful as Bitcoin's and therefore as safe. There is no Myspace moment here. It will take ages until a new technology supersedes Bitcoin enough that it makes sense to dump Bitcoin for this new tech.

As far as 2009, well, Bitcoin's network effect was tiny, now it's much more robust to deal with a recession. I don't see the problem.

If you compare the dow jones, or the S&P 500 to the bitcoin chart you can notice that the stock's have been in a rally since 2009 right when bitcoin was just created, this means that the crypto currency space has never experienced a stock bear market, because stocks have been bullish since 2009 and right now they are starting to fall and I believe there will be a bigger crash than the one that happened in 2008-2009, based on this we can say that all the thousand's of bitcoin "deaths" where just mere corrections, like when bitcoin went from 30$ to 2$ when it went from 1200$ to 200$ and now from 20k to 3k all of the previous corrections where with a bullish stock market, but now the stock market for the first time since 2009 is beginning to plunge and is taking cryptos down with it, something that hasn't happened in the previous btc "deaths"

This makes me believe that this time crypto may never come back at all, like when tulips crashed in the 1600's or when the thousand of .com stocks never recovered (like pets.com) etc this means that this time bitcoin and other crypto currencies may NEVER come back to a ATH like it has happened before, what we learnt from previous bubbles caused by a new emerging technology eg the .com bubble with the rise of the internet is that the majority of companies (this time coins) die off and I believe right now bitcoin is so old, rusty with high tx times and high fees that it is possible it may become the MySpace of crypto, having said this it is also really posible that cryptos stop existing at all, because there are coins that really don't need a blockchain and are just pump ICO'S that have no real purpose, the only thing that its left is the blockchain technology by itself that dosnt really need to have a token with value attached to work, the world could adopt the blockchain technology without the need to have a pump token attached to it.

this is my opinion right now, I think blockchain technology is here to stay but I put into a debate if crypto tokens will be here to stay.