How The Recent Fall In The Stock Market Is Affecting Crypto Investing

The stock market’s situation in 2024 has been very dicey, with rises and falls. A complex interplay of economic indicators, geopolitical events, and investor sentiment has shaped market trends. This situation has significantly affected the crypto market since these two asset classes have exhibited a degree of correlation, particularly during periods of economic uncertainty or market volatility.

Correlation Between Stock Market and Crypto Market

Traditionally viewed as distinct asset classes, cryptocurrencies have grown correlated with traditional financial markets. However, considering the evolving relationship between the stock and crypto markets, new investors are necessary as its opportunities are limitless. Let us consider how these two concepts are related below:

Macroeconomic Influences: Both stock and crypto markets are increasingly susceptible to macroeconomic conditions. Monetary policy adjustments, such as interest rate changes, have a ripple effect on both. Furthermore, overarching economic trends and investor sentiment, influenced by factors like GDP growth, inflation, and geopolitical events, tend to move these markets in tandem.

Liquidity Dynamics: The flow of capital between stock and crypto markets can amplify market movements. Periods of market stress often lead to investors liquidating positions in both asset classes to manage risk or meet margin calls. This interconnectedness can exacerbate downward trends in both markets.

Market Maturation: As the cryptocurrency ecosystem matures, its integration with traditional finance deepens. The influx of institutional investors, regulatory clarity, and the development of crypto-linked financial instruments are converging these markets. Consequently, the historical divergence between stock and crypto performance is narrowing.

The 2024 Stock Market Downturn: Causes and Immediate Effects

Elevated inflation rates throughout 2023 and 2024 eroded consumer purchasing power and squeezed corporate profit margins. Moreover, central banks’ aggressive monetary tightening policies to combat inflation created a challenging economic environment. Higher interest rates generally lead to higher borrowing costs, which can slow economic growth and reduce corporate profits, causing stock prices to fall.

However, geopolitical tensions and economic uncertainties also contributed to investor anxiety. Geopolitical tensions, such as the ongoing conflicts in Eastern Europe and trade disputes between major economies, have also added to the uncertainty. These tensions disrupt supply chains, increase the cost of goods, and generally create an unstable environment for investment.

The immediate effect of a falling stock market is a loss of wealth for investors, which can lead to a reduction in consumer spending and a slowdown in economic growth. The impact on the crypto market is multifaceted and can be seen in various investor behaviors and market trends. Nevertheless, these downturns have changed most crypto investors’ plans, moving them to make decisions to counter these downturns.

Market downturns often prompt regulatory scrutiny and policy responses aimed at stabilizing financial markets. However, this could lead to increased regulatory oversight and the development of clearer regulatory frameworks for the crypto market. While this might create short-term uncertainty, it can also provide long-term stability and legitimacy to the market.

Impact on Crypto Market Sentiment and Prices

The recent fall in the stock market has profoundly impacted market sentiment within the crypto space. Investor sentiment is crucial in driving market prices, especially in a speculative market like cryptocurrencies. Here is how these downturns affect market sentiments

Pessimism and Fear: The stock market downturn has exacerbated fears of a broader economic slowdown, leading to a more pessimistic outlook among crypto investors. Fear, uncertainty, and doubt (FUD) are prevalent during such times, often resulting in panic selling and significant price declines in cryptocurrencies.
Opportunistic Buying: Conversely, some investors view the market downturn as an opportunity to buy cryptocurrencies at lower prices. This opportunistic behavior is driven by the belief that cryptocurrencies’ long-term potential remains intact despite short-term market fluctuations. Nevertheless, most crypto investors often look for oversold conditions to accumulate assets at a discount.
Volatility and Speculation: The increased volatility in the crypto market during stock market downturns attracts speculative traders looking to profit from short-term price movements. This can lead to sharp price swings, further contributing to the market’s overall volatility, which is bad for investment.

Taking a Flight to Safe Crypto Investment Despite the Stock Market Downturn

Investors often seek safe-haven assets during stock market volatility to protect their capital. Traditionally, assets like gold, bonds, and the U.S. dollar have been considered safe havens. For crypto users, there are steps you can take to ensure that the fall in the stock market will not affect you and that you can take a fast flight to safety.

Investing in Blue Chip Cryptocurrencies: Some investors view cryptocurrencies, particularly Bitcoin, as a store of value and a hedge against inflation and currency devaluation. During the recent stock market downturn, there has been an observable shift, with some eyeing a “blue chip” crypto investment into Bitcoin. They have a strong track record and a large user base, making them relatively safer than newer and less established coins.
DeFi (Decentralized Finance): While DeFi offers high-yield opportunities, it also involves significant risks. However, some DeFi protocols are relatively stable and can provide attractive returns. Some examples of popular DeFi protocols are Aave, Compound, Uniswap, SushiSwap, and many more.
Risk Assessment: Evaluate the risk associated with each investment. Some cryptocurrencies are more speculative than others. It’s essential to weigh potential rewards against the level of risk you’re comfortable with.

Summary

The 2024 stock market downturn was a complex event with multiple contributing factors. Its immediate effects were felt across various sectors of the economy, impacting investors, businesses, and cryptocurrencies. The fall has significantly impacted investor behavior, market sentiment, and prices.

While the full extent of the downturn’s long-term consequences remains to be seen, it marked a significant turning point for all crypto investors. However, despite the short-term challenges, cryptocurrencies’ long-term potential remains compelling, driven by ongoing innovation, increased adoption, and market maturation. Therefore, the interplay between traditional and crypto markets will undoubtedly shape the future of investing positively in future times.

This post may contain affiliate links. Financial Panther has partnered with AwardWallet and CardRatings for our coverage of credit card products. Financial Panther, AwardWallet, and CardRatings may receive a commission from card issuers. Some or all of the card offers that appear on the website are from advertisers. Compensation may impact on how and where card products appear on the site. The site does not include all card companies, or all available card offers. Opinions, reviews, analyses & recommendations are the author’s alone, and have not been reviewed, endorsed or approved by any of these entities.

More Recommended Ebike/Scooters

Check out these other ebikes and scooters I've reviewed:

Urban Arrow Ebike – Last year, I made one of the largest purchases I’ve ever made – I bought a $9,000 electric cargo bike from Urban Arrow. In my Urban Arrow review, I will discuss what it is and why I decided to buy this bike, as well as discuss how impactful a bike like this can be on your journey to financial independence.
Troxus Explorer Step-Thru Ebike – The Troxus Explorer Step-Thru is a fat-tire ebike that I’ve had the pleasure of riding for a while now. It has amazing power, great looks, and awesome range. If you’re looking for a great fat-tire ebike that offers a lot for the price, the Troxus Explorer Step-Thru is definitely one for you to consider. Check out my Troxus Explorer Step-Thru Review.
Hovsco HovBeta Ebike – The HovBeta is a folding ebike with great specs and a lot of interesting features, and importantly, it’s sold at a good price point. I’ve had a blast commuting with it and using it to do deliveries with DoorDash, Uber Eats, and Grubhub. Check out my Hovsco HovBeta Ebike Review.
Vanpowers Manidae Ebike – The Vanpowers Manidae is a fat tire ebike that I’ve been riding as my primary winter commuting bike and have also been using it to do food delivery with apps like DoorDash, Uber Eats, and Grubhub. After clocking in a decent number of miles with this ebike, I wanted to write a post sharing what my experience with the Vanpowers Manidae ebike has been like. Check out my Vanpowers Manidae Review.
Sohamo S3 Step-Thru Folding EBike Review – A Great Value Folding Ebike – The Sohamo S3 Step-Thru Folding Ebike is an entry-level folding ebike that offers a lot of value for the price point. I’ve been riding the Sohamo S3 for a while now, putting the bike through its paces, and I have to say, this bike has exceeded all of my expectations. Check out my Sohamo Review.
KBO Flip Ebike – The KBO Flip is an excellent bike. I’ve had a great time riding it and think it’s a versatile bike that can be used for a lot of purposes and can fit a variety of lifestyles. It’s worked out great for me as a general commuter bike and as a food delivery bike. Check out my KBO Flip Review.
Hiboy P7 Commuter Ebike – The Hiboy P7 is an excellent electric commuter bike that’s offered at an affordable price point. The range and speed of this bike are both very good, so you won’t have any trouble getting anywhere you need to go with it. As a food delivery vehicle, this is also good – with how much range it offers, you’ll be able to work all day on a single charge. Check out my Hiboy P7 Commuter Electric Bike Review.
Himiway Escape Ebike – The Himiway Escape is an interesting bike for anyone looking for a moped-style ebike. If you’re a gig economy worker, the Himiway Escape is particularly interesting and it’s possible to think of it as an investment, especially if you can opt to do deliveries with the Himiway versus using a car. It’s not cheap, but you can definitely make your money back when you compare the mileage you’ll put on your car versus using an ebike. Check out my Himiway Escape Bike Review.
Espin Sport Ebike – The Espin Sport is a good ebike for someone who is looking for an ebike that feels and rides more like a regular bike. There are many ebikes that are really only bikes in name. In reality, they’re basically electric mopeds. The Espin Sport, by contrast, is a bike you could probably ride without the battery and you’d feel like you’re just riding a regular bike. Check out my Espin Sport Review.
Varla Eagle One Scooter – The Varla Eagle One is an excellent scooter that can make sense for a lot of people. It can work as a primary mode of transportation. You can use it to work on gig economy apps like DoorDash, Uber Eats, and Grubhub. And it can also be a recreational vehicle if you’d prefer to use it for that. Check out my Varla Eagle One Review.
Varla Falcon Scooter – The Varla Falcon is an excellent scooter that offers a good amount of power at a lower price point compared to more powerful scooters. It’s not exactly an entry-level scooter, nor is it a high-powered scooter. I think it fits somewhere in-between those two categories – an intermediate scooter if I had to give it a category. Check out my Varla Falcon Review.
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Fucare H3 Scooter – The Fucare H3 is a fun scooter and I’ve enjoyed testing it out. For a daily commuter or quick trips or errands, the Fucare H3 is probably the scooter I’ll use. It’s portable and easy to maneuver, so it’s just easier to take on the road when I need it. Check out my Fucare H3 Scooter Review.

More Recommended Investing App Bonuses

For additional investing app bonuses, be sure to check out the ones below:

M1 Finance ($100) – This is a great robo-advisor that has no fees and allows you to create a customized portfolio based on your risk tolerance. You also get $100 for opening an account. Check out my M1 Finance Referral Bonus – Step-By-Step Guide.
SoFi Invest ($25) – SoFi Invest is an easy brokerage account bonus that you can earn with just a few minutes of work. Use my SoFi Invest referral link, fund your SoFi Invest brokerage account with just $10 and you’ll get $25 of free stock. I also have a step-by-step guide for the SoFi Invest referral bonus.
Webull (20 free stock shares) – Webull's current promotion gives you 20 free shares valued between $3-$3,000 each if you open an account using my referral link. Here’s a guide I wrote about how to earn your free shares using Webull.
Moomoo (15 free stocks) – Moomoo is a free investing app currently offering 2 different referral bonuses if you open an account using a referral link. Read my Moomoo referral bonus guide for more information.
Robinhood (1 free stock) – Robinhood gives you a free stock valued between $2.50-$225 if you open an account using my referral link.
Public (1 free stock) - Public gives you a free stock valued between $3-$70 if you open an account using my referral link.

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If you’re looking for more easy bank bonuses, check out the below options. These bonuses are all easy to earn and have no fees or minimum balance requirements to worry about.

Upgrade ($200) – Upgrade is a free checking account that’s currently offering a $200 referral bonus if you open an account and complete a direct deposit. These bonus terms are easy to meet, so it’s well worth doing this bonus as soon as you can. Here’s a post I wrote with more details: Upgrade $200 Referral Bonus – Step By Step Directions.
Ally Bank ($100) – Of all the banks out there, Ally is, without a doubt, my favorite. At the moment, Ally is offering $100 to customers who open an eligible Ally account and meet the requirements. Here are the step-by-step directions to earn your Ally Bank referral bonus.
Fairwinds Credit Union ($175) – Fairwinds Credit Union is offering a referral bonus for users that sign up using a referral link. Fairwinds has no fees or minimum balance, so this is a particularly easy bonus to earn. Since this is a smaller credit union, my gut instinct tells me this offer won’t be around long, so if you’re in a position to meet the bonus requirements, grab this bonus before it’s gone. Here is my step-by-step guide on how to earn your Fairwinds Credit Union bonus.
Chime ($100) - Chime is a free bank account that offers a referral bonus if you use a referral link and complete a direct deposit of $200 or more. In practice, any ACH transfer into this account triggers the bonus. This bonus is easy to earn and posts instantly, so you’ll know if you met the requirements as soon as you move money into the account. I wrote a step-by-step guide on how to earn your Chime referral bonus that I recommend you check out.
US Bank Business ($900) – This is a fairly easy bank bonus to earn, since there are no direct deposit requirements. In addition, you can open the Silver Business Checking account, which comes with no monthly fees. Check out how to earn this big bonus here.
GO2Bank ($50) - GO2Bank is an easy bank bonus that I recommend people take advantage of if they have an easy way of meeting the direct deposit requirement. I like that it’s easy to open the account and that the bonus pays out quickly. Check out my step-by-step guide on how to earn your GO2Bank $50 referral bonus.
Current ($50) – Current is a free fintech bank that’s offering new users a $50 referral bonus after signing up for an account using a referral link. Current is an easy bonus to earn and also gives you access to three savings accounts that pay you 4% interest on up to $2,000. That means you can put away up to $6,000 earning 4% interest. That’s very good and makes Current an account I recommend to everyone. Check out my step-by-step guide on how to earn your Current Bank bonus.
Novo Bank ($40) - Novo bank is a free business checking account that’s currently offering a $40 bonus if you open a Novo business checking account using a referral link. In addition to being a good bank bonus, Novo is also a good business checking account. It has no monthly fees or minimum balance requirements and operates a good app and website. Indeed, it’s the business checking account I currently use for this blog. Check out my post on how to easily open a Novo account.
Varo ($25) – Varo is a free fintech banking app similar to Chime or Current. It’s currently offering a $25 bonus to new users that open a new Varo account with a referral link. The bonus for this bank is very easy to meet, all you need to do is spend $20 within 30 days of opening your Varo account. Check out my step-by-step guide to learn how to earn this bonus.

Kevin is an attorney and the blogger behind Financial Panther, a blog about personal finance, travel hacking, and side hustling using the gig economy. He paid off $87,000 worth of student loans in just 2.5 years by choosing not to live like a big shot lawyer.

Kevin is passionate about earning money using the gig economy and you can see all the ways he makes extra income every month in his side hustle reports.

Kevin is also big on using the latest fintech apps to improve his finances. Some of Kevin's favorite fintech apps include:

SoFi Money. A really good checking account with absolutely no fees. You'll get a $25 referral bonus if you open a SoFi Money account with a referral link, and an additional $300 if you complete a direct deposit.
5% Savings Accounts. I'm currently getting 5.24% interest on my savings through a company called Raisin. Opening a Raisin account takes minutes to complete, it's free, and all of your funds are FDIC-insured. I explain how it works, why I'm now using it to store my emergency fund and any other cash savings I have, and why I recommend everyone check it out in this review.
US Bank Business. US Bank is currently offering new business customers a $900 signup bonus after opening a new account and meeting certain requirements.
M1 Finance. This is a great robo-advisor that has no fees and allows you to create a customized portfolio based on your risk tolerance. You also get $100 for opening an account.
Empower. One of best free apps you can use to monitor your portfolio and track your net worth. This is one of the apps I use to track my financial accounts.

Feel free to send Kevin a message here.