Further, they are saying that the pullback we are currently seeing in bitcoin is already hurting the stock market.
(One such source: http://fortune.com/2017/12/26/bitcoin-stocks-slump/)
My response to that:
Are you kidding me?!
How in the world is bitcoin selling off going to affect the stock market in any meaningful way?
A bit of perspective:
The entire cryptocurrency market cap is $590 Billion (with a "B"), while the entire S&P 500 has a market cap of over $24 Trillion (with a "T").
(source: https://coinmarketcap.com/)
Of that $590 Billion, Bitcoin makes up about $270 billion worth, so just under half.
Are you trying to tell me that a $270 Billion dollar market is going to wreak havoc on a $24 Trillion dollar market should it start to crash?
That comes out to roughly 1% of the market value of the S&P 500.
Are you telling me that a selloff in an asset that is 1% the size is going to cause any meaningful contagion?
I find that very hard to believe.
Some caveats:
If some funds are way over leveraged on bitcoin and they get caught on the wrong side, then perhaps we could see some spill over, but for now there are so few instituions in bitcoin that there is no way this could happen right now.
What about retail holders who suddenly find themselves getting margin calls or finding themselves down heavily in their bitcoin investment?
First of all, there aren't likely to be any margin calls for retail buyers. Not many places out there that are loaded with retail investors allow you to buy bitcoin on margin.
So, we can probably shoot down that line of thinking as well.
I would actually argue that bitcoin going up is more of a danger to the stock market than if it crashes, people will be pulling money out of stocks to put into bitcoin as the returns are far outpacing U.S. stocks.
Overall, I find the notion that bitcoin could somehow have some contagion effect on the U.S. stock markets were it to really sell off very hard to believe.
My opinion is, the ones making these claims are trying to be the first to sound the alarms if bitcoin should grow many multiples of where it is today.
That and they are trying to get views/clicks.
Remember, doom and gloom sells. As does attaching your name to anything bitcoin right now. :)
Stay informed my friends.
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http://diversity.appstate.edu/saywhat/
http://www.mcneillifestories.com/doom-and-gloom/
Follow me: @jrcornel
no it wont but infect other currencies will get more weightage due to that the market will raise more and more currencies will begin to raise
I agree that Bitcoin shooting up to $100,000 is a much bigger threat for the stock market than crashing to $1000!
My thought as well. Bitcoin isn't intertwined with the real economy basically at all at this point. Not many institutions own it and the exchanges that do trade it aren't trading anything else. No much contagion risk at all in my opinion.
Hello @otage ! I see a consensus among fin. system experts that when the “King’s Men” see a serious threat to tax revenues or to official management of monetary policy they are going to “come out swinging”. What do you think of the notion that the threat will be quite apparent when the bitcoin price gets so high that there will be enough tiny fractions of one bitcoin around to support buying and selling goods and services (using those tiny fractions) on a wide scale? Do let me know if you see any discussions on this matter, and thanks in advance.
I think the rise of crypto is indicative that the rest of the economy will soon hemorrhage, but no, I don't see any bitcoin slump affecting the economy.
Thats ridiculous. Crypto is such a small percentage of the market. Where is the money going?
"Experts"
So in reverse when bitcoin goes up and if stocks go up can it be said that its all thanks to bitcoin? Of course not. Everyone who are crypto haters will try to find a way to blame crypto for everything. This is the type of review that we do not need. There is no parallel between crypto and stocks. If those bankers and the government did not scam so many of us I think crypto would never have boomed the way it is now.
The market cap for crypto will continue to grow as more people diversify their investment portfolios. After going through the 08-09 crash I do not have faith that my 401k will earn me enough for retirement and I think many in my generation, millennial, and the younger generations believe the same.
Yep, I am with you 100%. Good comment.
I think it will have some impact but not to the extent like in 1999 during dot com crash. To reach that level crypto has to takae off for few more years. But this rally and bubble is not sustainable but block chain will be
to be fair, the overall concept of crypto market affecting stock market isn't so outlandish; remember, "subprime" loans wasn't anywhere close to overall size of stocks/bonds yet had a profound effect in 2008-2009.
That said, a little dump like Thursday really doesn't do much, prices were still WAY WAY up for even the week on that day. Furthermore, even if cryptos have an effect on stocks, it is most likely the effect would be delayed by a decent amount of time, measured in months if not years.
Good point, though the mortgage market was roughly $10 trillion at the time. Not subprime, but the entire market. Plus it was much more interconnected to the overall economy than something like bitcoin.
Subprime really wasn't connected to the larger market that much, only in similarity of sector.
Same goes for crypto, it's the subprime of fiat right? While bitcoin itself may not be able to print money, other cryptos DO simply by being created. And also bitcoin itself now forks often, thus doubling and pentupling itself. Regular fiat rarely does that (except in the 1930s when the US gov't spot-reduced the value of the dollar to stop specie payments).
A subprime crash can create a feeling of poorness from once heightened wealth, and that can create tightening of the belt, just like crypto rising creates the opposite ,no? Almost a trillion in crypto has been created from nothing, and those crypto millionaires spend money. That creates a rise in spending, which will create an even worse stoppage of spending on the "other side" if crypto bubble collapses.
Bitcoin started during the last stock market crash -
so they both also started a bull run around the same time ,
so chances are they will also be in a bear market around the same time
ELLIOT WAVE --
BTC/crypto next bull run will be dwarf the run we just had
in percentage terms or absolute terms?
Crypto markets definitely wouldn’t affect the stock market at this point in time. Cryptos are a totally different class of “asset”. They are completely independent. The way the BTC Futures are set up doesn’t even affect it. This is a ridiculous claim. The types of investors are totally different as well in general. Crypto investors are anybody. Small money. Big money. Etc. anybody. Stocks are companies and people with big money. There is no affect on the stock market from crypto markets. It’s a crazy claim
Yep, and they are not really interconnected at all. The same exchanges that trade stocks, don't trade cryptos. Also the few funds that invest in crypto, aren't really stock funds... so very little interconnection.
Well, if you believe that stock market is in a bubble then sell-off in stocks will quite likely be triggered by crypto bubble bursting. People will see blood on the streets on TV and will rush for the exit. Something will trigger people to run for cover at some point and I believe that most likely the signal will come from the crypto market.
I'm not saying it'll happen tomorrow and I'm not saying that there is a fundamental correlation between these markets. But I believe the markets have already discounted Trump and there is not a lot of optimism left to continue in 2018.
I agree that you don't see 30% gains in the stock market very often, and we are about to witness one of those years. The returns for 2018 are projected to be much smaller, around the 8% level. Though I am not sure that a bitcoin crash would be enough to get stock investors to run for the hills.
stock markets are at all time highs and is due for profit booking. so that might consolidate equities and cryptos can catch up the upside wind
They are looking for an excuse because the stock market will crash badly (imho) in 2018, but it's not because of Bitcoin. It's because they keep pumping fiat money into the system like a big balloon that will pop.
Salut your writing, dream is something that definitely get tomorrow, if we always pray and work
This article reminds me to keep digging and keep searching for information and new things.
But I have not understood the substance of the positive thought itself as to what and how to make our minds become positive. Maybe in another article can explain a little bit the meaning of positive thoughts.
@khalmaliaa
@jrcornel
Exactly! Cryptocurrency marketcap is meaningless compared to a stock or bond market, but I believe this will change drastically. I also agree, if stock market which is in bubble pops, that this will only benefit Bitcoin.
Awesome like always. keep the good work friend
On bitcoin your post is very informative.
i love your writing.....
i wish you love me dear brother
this is my post,,im new please help me brother
https://steemit.com/dtube/@saifuk/famous-clock-in-the-world
Also, I honestly don't think the Bitcoin is going to crash. At least not now.
When do you think?
Tough to say... Maybe in a few years. Not yet at least. But that's just my personal opinion :-)
an EX SPURT is a former high pressure drip.
Keep that in mind.
@jrcornel your analysis is nothing but pragmatic. You have stated the obvious. The problem with most of these expert analysts is that they sensationalize events just as you have rightly pointed out.
Let's see how events unfold nevertheless.
2018 is certainly going to be a rather interesting year for Bitcoin. (and altcoins in general) Who knows what we will be at in a monetary sense this time next year, but we certainly need to hold onto our hats.
Well, since both market are driven a lot by psychology, fear in one sector (that has gained a ton of attention over the last year), could possibly spill over. I shouldn't, but it could. The human mind is pretty weird, and sometimes people do weird shit.
But let's enjoy the Christmas and celebrate the new year instead :)
Happy new year people!
Haha yes that is a good point. I guess "fear" could spill over. Although my guess would be that if bitcoin was tanking some of the money that comes out might even go into gold or stocks... I don't really see how one would drag down the other.
Gold i could especially see happening. Since people are selling their gold now, to buy bitcoin, we could see a lot of money moving back into gold when/ if it ever crashes
An importand human who is in stock market say bitcoin will get out of the way and market is down. :) I dont understand.
the concept of crypto currency is surprise for other currencys .
@jrcornel I think I will agree with your analysis, it makes serious sense. They are just being scarstic.
Before I forget, I will follow you once you give me your word to follow back. Thanks
More or less the same effect as when my Wife pinches my Ice cream then ?
( You will gather that I do not know much about Financial Markets!)
I watch your posts , amazing articles.
“I would actually argue that bitcoin going up is more of a danger to the stock market than if it crashes, people will be pulling money out of stocks to put into bitcoin as the returns are far outpacing U.S. stocks.”
Agreed.
It was also hard to believe in 2009 that Bitcoin would be worth thousands of dollars. I believe it will affect the stock market sooner than we think!
Bitcoin itself will reach Trillion dollar market cap in 2018 . Entire cryptocurrency maybe 2 Trillion . Look at Gold at 8 Trillion . Now even Bitcoin is known as store of value and as an investment too . People would shift their Gold money into Bitcoin in near future .
I think this very well might be the case. It doesn't even have to work as a currency, just has to work as a store of value.
I translate this to spanish :) https://steemit.com/spanish/@trenand/los-expertos-estan-comenzando-a-decir-que-un-colapso-en-bitcoin-se-extendera-a-la-bolsa-de-valores
bitcoin is a Trojan horse to the stock market.
I am in agreement with you. It just doesn’ make sense that bitcoin will cras the market.
If the central bank members has stated that, that means in my opinion they are fearing something. The correction in bitcoin is not related to bitcoin. It is related to the distress in the bond market. If we remember Janet Yellen said “ she want to start normaliseing her balance sheet” her QE has not worked.
@jrcornel Great point. This could so possibly be. Best wishes.
Great post there, keep up good work !
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I don't considered about it.