2023-10-07 17:07:36
We don’t know how the price of bitcoin would have reacted to the biggest one-day stock market crash of all time. However, if the economic situation worsens further, we may learn to what extent the cryptocurrency can withstand such a crisis. According to ADP’s labor market report, the number of new jobs has fallen since the coronavirus crisis: instead of the expected 153,000 new jobs, only 89,000 were created. However, according to the latest report, job growth in September was stronger than expected. At the same time, while some expect the Fed to end its rate hike cycle, most market participants fear that the lagged effects of rate hikes might seriously affect economic growth. We remember October 19, 1987 as Black Monday, when the New York stock market fell within a day. One of the reasons for the collapse was the overbought stock market, and another was that the bond yield of American bonds rose continuously in the period before Black Monday. The situation is similar today, as the yield on the ten-year US bond has risen from 3.30% to 4.72% since May of that year, and the US budget situation is deteriorating rapidly. The FDIC recently warned that US banks are facing $600 billion in losses, but with rising bond yields, the situation might be worse. We don’t know how bitcoin would have fared during the 1987 market crash, but in March of this year it was up more than 20% when Silicon Valley Bank, Signature Bank, Silvergate Bank and Credit Suisse collapsed. People were afraid that even more banks would fail, which paralleled the remarkable growth in the cryptocurrency sector. It would therefore not be a surprise if the economy collapsed following the explosive rise in bond yields, and the beneficiary of the situation would be BTC.
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