Cause and effect: Will the Bitcoin price drop if the stock market crashes? – Cointelegraph

Cause and effect: Will the Bitcoin price drop if the stock market crashes? – Cointelegraph

The year 2009 was marked by both the genesis of Bitcoin and the United States stock market starting an unprecedented bull market — one that’s continued almost uninterrupted since. However, murmurings of a crash are always present, and the noise has recently been getting louder. 

Against the backdrop of COVID-19 refusing to go away, stocks keep pushing higher, backed by an unprecedented amount of government support. But now that quantitative easing policies are no longer being implemented, is the talk of a stock market crash justified?

If so, this could bring unfortunate news for Bitcoin (BTC): It could be argued that there are signs of a strong correlation between Bitcoin and stocks. So, what may happen to crypto if the bottom falls out of U.S. equities?

How likely is a crash?

Taking crypto out of the picture, the increasing speculation that a crash is imminent does hold some merit. In June, the inflation rate in the U.S. was significantly higher than expected. In the meantime, the government continued to issue bonds and accrue more debt to the point that there’s now talk of raising the debt ceiling.

The justification for this is, of course, the ongoing pandemic relief effort. But the government is pumping money into the economy when other signs, such as U.S. stock prices, indicate that the relief isn’t needed. U.S. real estate markets are also surging, while the Federal Reserve has already expressed concerns that investors are becoming increasingly reckless, Source…