Many are predicting that the next financial crisis will hit anywhere in 2020. The cryptocurrency market is going from major highs to major lows, and its market cap is swinging from “strange” numbers such as $500 billion, $300 billion to $728 billion in December 2017. Now, the crypto market cap is around $120 billion. The cryptocurrency “crisis” has undoubtedly come.
The more interesting question is how a potential financial crisis will correlate with Bitcoin’s price and the overall digital coin market. As these “assets” are not really correlated with other major economic factors, they can be an actual hedge against a potential economic “bloodbath”.
Except for government-backed coins and stablecoins, such as Tether, the other alt coins are not related to other financial markets. According to Crypto Daily and analysts from SFOX, a cryptocurrency dealer, if an economic crisis occurs, then the cryptocurrency market might flourish. There is, according to the sources, an inverse correlation between prices and value of digital coins and the rest of the financial markets.
While many are shocked by the huge swings in cryptocurrencies’ prices, a more closer look might be appropriate for the stock market. Giants in terms of market cap such as Amazon and Facebook saw billions of dollars wiped from the market caps. However, the stock market is reportedly overheating in the moment, and a correction is soon to be expected.