Our amazing Alpha Research Team has some conflicting ideas about what will happen in the US stock market for the rest of this year. And also, how much it will affect crypto markets.
But we are staying on top of it so we can present our best research to you. And if you want to know what we think in real time, then you should be joining Altcoin Buzz Alpha. Until then, let’s see how different stock market performance would play out in crypto.
Stock Market Grows
It’s important to remember that while the correlation is not super strong, there is a correlation between Bitcoin and the US stock market. Often when one goes up, the other does too. And then alts follow Bitcoin later.
1) Grow, Grow
So one argument is the stock market will grow. And so will crypto. The global liquidity argument is the biggest one in this scenario. The idea here is simple.
As more central banks around the world print more $$ (read: add liquidity to the market) then that money has to go someplace. So people find productive assets to invest in. That’s bullish for stocks, high-value real estate, luxury collectibles, and crypto.
Here investing is a need. They have to as these asset holders know the money printer means inflation will eat more of their value. So they need to look for investments that earn more than inflation will take. This is why yes to stocks and crypto but not to bonds.
If global liquidity continues its trend of growing, then that’s bullish for the stock market and crypto.
Source: X
2) Grow, Shrink
The next argument is the stock market grows but crypto doesn’t. This argument is a little tougher. If markets, and more importantly institutional investors, are starting to see crypto as a “risk-on” type of investment the same way they do stocks, then what would cause a divergence like this?
US economic data is a big one. We know the US is a big market for crypto but there are other big markets, too. Especially in Asia.
India is first in total numbers of crypto users followed by China and the US. India and China alone have over 150 million crypto users. And while their economy does have some dependence on the US economy. It’s not complete and total dependence.
So if the US economy does something like avoid recession or manage interest rates and monetary policy better, the US stock market would benefit MUCH more than crypto markets would.
The other major factor that could be positive for stocks but not for crypto in the upcoming presidential election. It could happen regardless of who wins but it is more likely if Harris beats Trump as her policies and goals for the US Government’s interaction with crypto are unknown. At least for now. Here are 2 conflicting opinions just a couple of days apart. The reality is we don’t know what she will do if she wins.
Stock Market Declines
Then the stock market could decline. And for any number of reasons like
- Normal price correction.
- A recession.
- Other bad economic data.
So what happens then?
3) Decline, Grow
Is there a possible scenario where the US stock market declines but crypto grows? One way would be to see a huge jump in emerging market adoption. Vietnam has the 2nd highest % of crypto users at 21% of its population. The Phillippines, Brazil, and Venezuela all have between 10-13% holders in their population.
If India alone got to 10% of its population, that would be 140 million users. That’s 90 million more people in crypto markets. That would be unbelievably bullish. Positive news about crypto coming out of India, China, or Russia would be bullish too. Russia is already in talks to abandon the dollar and accept crypto for oil and gas payments.
Source: X
Events like this are both bullish for crypto but exclude US markets completely. So this is another way that scenario could play out.
4) Decline, Decline
Then we have where both markets decline. The argument here is a pretty easy one. If liquidity leaves the system, then you know what happens. We saw it for all of 2022 and part of 2023 in crypto markets.
People sell or get liquidated on their riskiest crypto trades first and then the strongest collateral, Bitcoin, sells later to fund the differences. In US markets, a recession would hurt both the stock market and crypto. Unexpected legislation or even an unexpected outcome in the election could trigger a market decline too.
Source: X
Also, a big black swan event like a war or nuclear attack would mean both markets drop although that’s likely to be temporary.
Conclusion
Before we finish up, did you know we just started our own Discord Server? It’s free and you can join our community and talk with each other, Alpha members, and members of the Altcoin Buzz Team. Most of us are in there and you can ask us whatever you want. So give it a try.
We’ve gone over 4 different scenarios that include the stock market rising or falling for the rest of the year. They also include crypto rising or falling. So which argument is the most compelling to you? What do you think will happen? And how will you prepare for it? Let us know in the comments below.
Disclaimer
The information discussed by Altcoin Buzz is not financial advice. This is for educational, entertainment, and informational purposes only. Any information or strategies are thoughts and opinions relevant to the accepted levels of risk tolerance of the writer/reviewers and their risk tolerance may be different than yours. We are not responsible for any losses that you may incur as a result of any investments directly or indirectly related to the information provided. Bitcoin and other cryptocurrencies are high-risk investments so please do your due diligence. Copyright Altcoin Buzz Pte Ltd.
