Stock Market May See Its Worst 12-Year Return in History, What Does It Mean for Bitcoin?

This month, the U.S. economy posted its longest period of expansion in its history. This is now officially the longest period its economy has gone without a recession. While there is room for celebration, such a fact should cause us to worry: is the current growth sustainable? According to some financial analysts, we could be in for a serious correction and, even worse, could see a complete wiping of almost all the gains we’ve had thus far.

An Ominous Prediction for the 2020s

According to noteworthy investor John Hussman, we have every reason to worry. He firmly believes that portfolio returns are “headed for their worst 12-year returns in history.” Pointing to weakening internal metrics within the market, he predicts that, at best, we could see a 50-65% decline in the stock market, which could possibly have an effect on Bitcoin. He has taken an alarmist tone on what he believes is the future fate of world markets. According to his measures, we could see a crash that matches or even exceeds 1929. “At present market levels, we expect the S&P 500 to produce negative total returns over the coming 12-year period,” he told Business Insider. He’s forecasting a full decade of negative equity returns. Hussman has claimed that his measures have pointed to previous crashes successfully, including the plunge of tech stocks in the early 2000s. In April 2007, he also claimed that the S&P would lose around -40% and it ended up declining -55% in the subsequent collapse of late 2007/08. So, he might be on to something after all.

What Will Bitcoin Do?

It’s often been written that Bitcoin is a hedge against risk and potential economic downturn. However, Bitcoin has thus far never experienced a recession, and there’s no reason to really believe it will rise to higher highs if we do get one. BeInCrypto has previously reported on Tom Lee from Fundstrat, who explained on CNBC Money that Bitcoin tends to follow the S&P500. In fact, it seems clear: the higher stocks go, the higher Bitcoin goes. The best years for the S&P500 have unquestionably also been the best years for Bitcoin. If we can extrapolate from previous trends, it seems likely that a collapse in the stock market as Hussman is predicting would lead to a collapse in Bitcoin’s price. This might not be the story many in the cryptocurrency industry want to hear, but it’s something to consider as we move into the 2020s.