There can only be one? PT 1. -The Theory

With all that has happened in the last month, there is a lot of speculation on what is going on in markets. I love a good conspiracy theory just as much as the next guy so let’s entertain a take that was presented to me recently…

Is it possible that there can only be one major market? If that’s the case then it’s possible that the stock market is headed for a crash at an ideal time for crypto currencies. In this scenario a large amount of money from the December highs would pour back into crypto markets in addition to a new wave of money, thus establishing crypto as a widely accepted store of value from stock market volatility. My question to this individual and one that many of you may also have was related to the fate of the currencies with ties to blue chips such as Ripple, which as a company has made an effort to work with a handful of these businesses.

Interesting theory… just so I understand correctly: when you say “is it possible that there can only be one major market?” are you speaking of “market” in terms of major types of markets such as the crypto market, stock market, etc?

If so, then here is my response:

I am very skeptical. If if were only possible to have one major market, how would you explain the historical existence of the FOREX markets, commodity markets, futures markets, options markets, equities markets, etc… There’s a market for anything that can be traded, and often a very major market at that. And given that historical precedence, it seems unreasonable to suggest that there can only be one major market, and as a result, the crypto market is poised to gain from the recent crashes in the stock market.

I wouldn’t hold your breath. They seem like unrelated issues to me.

But if you’re referring to “market” in a more narrow sense, such as Bitfinex vs. GDAX vs. Bittrex, etc, then I’m still very skeptical, and I think the reason is much more obvious. There are plenty of major markets in existence. And not just in the crypto space; the equities markets in the US are dominated by two separate actors: NASDAQ and the NYSE, not to mention all of the other equities markets world wide.

So I suppose my final point is that I must not really understand your point… and if I do, then I think it’s poorly conceived.

I suppose I was vague, but my understanding of the question posed to me which inspired the post is that this individual felt as though the most popular markets (stock, bond, commodities) seem to see an inverse direction in terms of participants than does the cryptocurrency market.

As a side note, the forex market sees the most money flow, however the bond market is the most popular and although stocks and bond move relatively inversely, they have quite a bit of overlap in market participants.

So this is all to say that combined, and ignoring an influx of capital from governments and municipalities into the crypto currency market, could both traditional markets sustain their current rate of growth while crypto markets make a run past the previous ATH. I believe that this is a tough question due to the lack of history to base this off of coupled with the December sell off and resulting January effect that is often tied to traditional markets for tax purposes.