Why Equity & Crypto Markets Falling? Is the Great Recession Coming?: 2021 has been a great year for the crypto and equity markets, with people making millions – where bitcoin broke its all-time highs, and a lot of Indian share rates also increased to a great extent. – Just like crypto coins 6000%, 3000% etc. It was expected that the scenario of 2021 will continue in 2022 as well. But didn't know that the market will start falling with the start of 2022, there will be continuous free fall and it will become bearish from bullish.
In 2022 the way tech stocks are falling down fast, and people are missing their palmy days but friends I remember ‘the great.com bubble bust' – is 2022 the beginning of the tech bubble bust? This fall of tech stocks is a tipping point for the coming global economic and financial crisis. Is the great recession coming again? Or, this time even worse, a repeat telecast of the 1929 great depression is going to happen? – Come let's see what's going to happen.
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Since last week, both NIFTY and SENSEX have been falling sharply – in a week Nifty is down 1000 points and Sensex has fallen more than 2,500 points…The same has happened to the global stock market and the fastest-growing companies – be it Netflix on Nasdaq, or Paytm on NSE, the same situation happened – market collapse and free fall.
The crypto market is also in turmoil due to major sell-offs – Bitcoin, Ether, Dogecoin, Binance Coin, and XRP are all falling sharply. In the last 5 days, Bitcoin went down up to 18% and ether up to 27%.
The fall of both the markets in this way, that also continuous sharp fall, as we said earlier, reminds us of a global economic crisis – the great recession that happened in 2008 and was no less than a catastrophe
What was that great recession?
In 2008, right after the dot com bust, we saw a huge economic downturn. In America, this decline was there for almost 1.5 years, but its effect was visible for about 3 years all over the world. In simple words, this crisis started because many people took such loans that they could not even afford – why? Because the government had brought relaxation in its policies.
But when this relaxation ended, borrowers were still unable to repay their loans – this had a direct impact on the bank, due to which several banks suffered. The global investment banking company Lehman Brothers went bankrupt and the entire financial system crashed all at once, which had an impact in Europe and in other countries as well.
Unfortunately, even today's current scenario is warning us of ‘the great recession to a large extent –
High debt, high inflation, negative global cues, COVID-19, and free-fall in the stock-crypto market – if nothing else the market is poised to widen the supply and demand gap.
Apart from this, we all know that, in the stock and crypto market, not only retail investors but also corporate houses invest huge amounts of money. If there is a continuous market crash, then not only the people but also Industries will have a negative effect.
As of today a lot of people are doing speculative trading- not on fundamentals but on speculative prices a lot of people are taking the risk. Not only Individuals but institutional buyers have also been holding such stocks in huge quantities – what will happen to these stocks and companies when the market crashes continuously? Not only people's money will sink, but additional debt and bad loans will also increase. In this scenario, the buying capacity of people will be reduced and then the market will suffer from – oversupply, overproduction, and higher prices!
Something similar happened in 1929, which is known as the great depression. Even at that time, people were optimistic and to a large extent, people had done speculative trading which led to the depression of 1929.
So will the Great Recession v.2.0 come again or will there be a repeat telecast of the Great Depression?
Well, nothing will be the same as before – the government, banks, and investment banking institutions are all more alert than ever and already have the antidote to facing such a situation. And this is the reason that whatever the situation may be, the government and we all will be able to float from this rough patch with ease.
Let me remind you that while the 2008 recession shook the US and European countries, India's economy did not have such a severe effect – because our export dependency was less and even today there are many such things, if any economic crisis comes, we will survive in some way or the other. Just remember that we have to be alert and invest our money and investments carefully. Instead of speculative trading, we should trade on the basis of fundamentals and technical analysis only.