During 2009 both genesis of Bitcoin and the United States stock market began an unmatched bull market and it happens to be one which continues to be unaffected till date. But the chances of a failure are just around the corner and recently the chances are getting bit stronger.
During the Covid-19 pandemic stocks kept rising higher with an unparalleled level of government support. But as the quantitative easing policies are not happening right now are the chances of a crash still possible?
If yes, this could possibly indicate bad news for Bitcoin (BTC): there are two sides to this with signs of a strong relation between Bitcoin and stocks. What will happen to crypto if the bottom falls out of U.S equities? If we remove crypto out of the plan the increasing chance for crash is inevitable. During June, the inflation rate in the U.S was higher than what was expected. During this the government continued to issue bonds and accrue more debt to the point where now there is conversation happening whether or not to increase the debt ceiling.
The reason for this is the ongoing pandemic relief effort. But the government is increasing money into the economy when other signs as the U.S stock prices point out the that relief isn’t necessary U.S real estate markets are also increasing with the federal reserve already being concerned about the investors turning irresponsible mentioning the growing interest in meme stocks and cryptocurrencies. All this money transferring into the economy has to diminish at some point which then leads to doubts that the crash would happen one way or another. Michael Van De Poppe thinks, “expectations of a heavy correction are justified,”
“The chances of a [stock market] collapse is increasing day-by-day, as the markets are getting overheated heavily not just in stocks, but real estate markets are showing similar signals… the markets is going into a bubble phase, created by an insane amount of printing from the fed, through which the middle class is getting squeezed.” Tom Zhang, marketing manager at AAX exchange, agrees that a crash is just around the corner and tells everyone to take precautions. “Given how common stock market declines are, and the fact that the market is somewhat overvalued, I think there’s a reasonably high probability of a stock market downturn,” Zhang said. “Nobody can say exactly when that will happen, though.”