When Stocks Drop, Crypto Soars

The US-China trade war and the collateral damage that the global economy is suffering, has fueled the fear of an upcoming recession. The general response to this fear is the loss of trust in stocks of public and private companies. What comes next? Investors turn to a safe haven or hedge against recession. In 2019, crypto experts speculate that Bitcoin is the new gold standard, and the digital safe haven. The bearish stock market has a connection with Bitcoin’s bull run and this correlation has been observed by crypto experts for the past two years.

When geopolitical tensions increase, it is an indicator of bad financial health. This may prove to be a blessing for the crypto community. With increasing instability, fear of a recession is looming on the global economy and investors are moving funds to stores of value like gold and silver. Since Bitcoin has been mirroring gold in the cryptocurrency world, the inflow of investment is beneficial to its demand and price action. Bitcoin has been rallying and acting as a safe haven when fiat currencies like Yuan, U.S. Dollar, and traditional assets U.S. stocks face a sharp decline.

Despite its correlation, there is no apparent trend that Bitcoin follows along with the movement of the traditional assets. So as the stock market goes down, it does not necessarily mean Bitcoin will go down too. Remember that Bitcoin is finite. Only so much will be mined. This means that as more people invest there will be scarcity. It is already a trusted store of value but it needs more stability in price action. Price fluctuation for Bitcoin is significantly more volatile than gold as indicated by the bullish run in April 2019, when Bitcoin sat below $4000 and hit $12,000 within two months.

As issues regarding regulatory clarity, price manipulation, volatility, liquidity, and institutional adoption get better, it is expected that Bitcoin will establish a better image for itself in the future. Bitcoin has an opportunity to reach more users when stock prices are dropping.

Bitcoin has evolved into a store of value in the financial community and with each passing day technological innovation and regulatory clarity is increasing its adoption globally. Crypto experts believe that Bitcoin will increase in price and value as a safe haven and true store of value. This would lead the price to levels higher than $20000.

Do you prefer Bitcoin or gold? We’d love to find out!