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Why A Stock Market Crash Would Be Good for Ethereum

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Stock Market Crash

As per the predictions from numerous analysts, a stock market crash could be nearer than projected. Leading this narrative is the “Rich Dad Poor Dad” author Robert Kiyosaki. He is advising investors to hedge their investments with alternative financial assets such as commodities and cryptocurrencies such as Ethereum.

As a leading cryptocurrency, Ethereum is likely to be a big beneficiary if this happens. Stock market crashes are not new in the financial world with the latest being in the 2017/2018 Financial crisis. Most crashes emerge due to factors such as inflation, liquidity, and weak regulations. However, I would sum all these triggers as greed.

ethereum

Cryptocurrencies

The main difference between the previous stock crashes and the future one is that now we have cryptocurrencies. Due to the frustrations and weaknesses with traditional money, cryptocurrencies are seen as the alternatives as most have fixed supply and are decentralized. This means that they purely exist and thrive on market forces. They have no central control authority.

This level of autonomy has created a sense of security and comfort to investors. Hence, the reason why we are witnessing an explosion in their adoption and acceptability.

Currently, the leading two cryptocurrencies in market valuation and fame are both Bitcoin and Ethereum. In the event there is any signal of a stock crash, these two would likely top the list of alternative financial assets for investors.

Is There a Possibility of Ethereum Price Hitting $10,000 in The Near Future?

Why Ethereum?

Although Ethereum is number two, it has more realistic uses than its peer bitcoin. Some analysts believe Ethereum will surpass bitcoin soon and take the leadership position in the market. Some of Ethereum’s uses include

  • Non-Fungible Tokens (NFT)
  • Decentralized finance (DeFI)
  • Transactional Currency (Ether)

These uses give Ethereum a bigger value proposition making it a potential hit for investors. In case there is a stock crash and the majority of investors divest to Cryptocurrency, a majority will flock to Ethereum making its price shoot.

High liquidity in the market.

There is high liquidity in the market currently due to some factors such as low-interest rates. This excess money has made investors pile it in the stock market resulting in a huge bull run than ever before. Hence, most of the stocks are at their highest in history.

This situation is creating fears that the bull run might be nearing the ending. The end of a run gives in to a market correction. Normally, the correction is the synonym for a crash.

One main factor you need to note is that stocks are based on fiat money. Fiat money is controlled by the government and has an unlimited supply. Examples of Fiat money are the Dollar and Euro.

A key contributor to the increasing supply is the ongoing global health pandemic of the Corona Virus. In handling it, most governments resulted in printing more money hence flooding the market.

This is the money that investors are piling in stocks making them rise. The risk comes as the majority of stock prices are not in tandem with the prevailing market and economic conditions.

Why Ethereum Needs To Be On Your Know List

Global recession

The majority of countries are experiencing a recession due to the lock-downs and loss in productivity associated with the Covid-19 lock-downs. A rise in the stock market prices during a recession indicates a mismatch in the market. In such circumstances, a correction is inevitable.

Conclusion on Ethereum

The possibility of a stock market crash remains real. If this happens, most investors could consider hedging with cryptocurrencies. As a leader in this market, Ethereum could become among the biggest beneficiaries in this shift. This has the potential of pushing its price towards the elusive $10,000 mark.

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