The blockchain and cryptocurrency sector has experienced a whirlwind of milestones in 2024. From the long-awaited debut of spot Bitcoin ETFs on Wall Street to the potential launch of an Ether ETF, momentum appears strong. Meanwhile, major political figures have voiced support for digital assets, and Bitcoin recently underwent its fourth halving—historically a bullish catalyst.
Yet, despite this optimism, the broader global landscape is growing increasingly unstable. Geopolitical tensions, extreme weather patterns, and persistent inflation are testing traditional financial systems. With mounting concerns about a potential collapse in traditional finance (TradFi), a critical question arises: Could a financial crisis derail crypto’s current bull run?
Signs of Instability in Traditional Finance
While crypto markets have gained maturity, they don’t operate in isolation. Experts warn that vulnerabilities in the global economy could spill over into digital assets.
Paolo Tasca, economist and founder of the UCL Centre for Blockchain Technologies, notes that while a full-blown crisis isn’t guaranteed, “major corrections in financial markets are definitely possible” by the end of 2025. He points to AI stock speculation and bloated government debt as key pressure points. With the U.S. running significant fiscal deficits, interest rate cuts may remain off the table—keeping monetary policy restrictive and markets under strain.
Yu Xiong, professor at Surrey Business School, echoes this concern: “A global financial crisis cannot be ruled out.” He cites ongoing inflation, geopolitical flashpoints like the Taiwan issue and Middle East conflicts, and inflated asset valuations—especially in tech—as potential triggers.
The Shiller PE ratio, a long-term measure of stock market valuation, stood at 35.64 in mid-June—more than double its historical average. This overvaluation suggests that equity markets, particularly growth and tech sectors, may be due for a correction.
“Equity markets are already overvalued—except for AI. A correction could trigger broader market instability,” says Nigel Green, CEO of deVere Group.
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Short-Term Pain, Long-Term Gain?
In the immediate aftermath of a financial crisis, crypto is unlikely to be immune. Historically, during periods of panic, investors sell risk assets indiscriminately to secure liquidity—crypto included.
“During the onset of financial crises, all assets see a sell-off,” says Yu Xiong. This means Bitcoin and Ethereum could drop alongside stocks and bonds.
However, once the initial shock subsides, a shift may occur. Investors seeking alternatives to failing institutions might turn to decentralized assets as a form of financial refuge.
“There could be a recovery phase where investors seek refuge in decentralized assets, potentially reigniting the crypto bull run,” Xiong adds.
Over the long term, blockchain’s core strengths—transparency, security, and decentralization—may position it as a resilient alternative. As AI accelerates digital transformation, demand for decentralized infrastructure could grow, further boosting crypto adoption.
Can Bitcoin Be a Safe Haven?
Some believe Bitcoin is evolving into a safe-haven asset—an uncorrelated store of value like gold. But evidence remains mixed.
Tasca argues that crypto has so far been procyclical, meaning it tends to move in tandem with broader risk markets.
“The academic literature doesn’t support BTC as a safe haven. If stocks fall and monetary policy tightens, I expect crypto to fall too.”
Lucas Kiely, CIO at Yield App, agrees: during a market sell-off, crypto would likely decline with TradFi assets initially. However, he sees Bitcoin recovering faster due to its “flight to quality” status within the crypto ecosystem—investors may flee from altcoins to BTC during turmoil.
Notably, during the Silicon Valley Bank collapse in March 2023, Bitcoin rallied despite global stock market tremors—a sign that under certain conditions, BTC may decouple from traditional markets.
Marc Fleury, CEO of Two Prime, believes crypto has “proven in the past cycle that it can sometimes function as a safe haven,” especially when trust in banks erodes.
Adoption: A Shield Against Collapse?
Growing mainstream adoption could help crypto withstand economic shocks. The approval of 11 spot Bitcoin ETFs in early 2025 has brought institutional capital into the market at an unprecedented pace.
BlackRock’s iShares Bitcoin Trust (IBIT) amassed $20 billion in assets by mid-year—one of the fastest ETF rollouts in history. This influx signals strong investor confidence and could provide structural support during downturns.
Paul Giordano of Marathon Digital notes: “More Americans now own crypto than own dogs.” This level of adoption suggests crypto is becoming embedded in household portfolios—not just speculative bets.
Green believes this trend will strengthen: “If TradFi falters, investors could view crypto as a hedge against instability, leading to continued investment and potentially driving prices higher.”
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What If the Internet Goes Down?
A more existential threat looms: what if a geopolitical crisis disrupts critical infrastructure?
Reza Bundy, CEO of Atlas Capital Team, warns that cryptocurrencies depend entirely on internet and power networks. In a conflict scenario—especially one involving cyberattacks on data centers or power grids—global crypto access could be severed.
“Armies won’t march across borders. Attacks will target banking systems and electrical providers.”
Bitcoin may be decentralized, but its infrastructure is not invulnerable. A widespread blackout or internet shutdown could freeze transactions worldwide.
Historian Mark Higgins remains skeptical about crypto’s resilience: “Cryptocurrencies are little more than a speculative asset… Unless this trend is truly unique—which history doesn’t suggest—it will run its course.”
He compares today’s digital assets to the chaotic era of “wildcat banking” in the 1800s, when state-issued banknotes varied wildly in value and reliability.
Beyond Speculation: The Need for Real-World Use Cases
For crypto to survive long-term financial stress, it must move beyond speculation.
Tasca emphasizes: “Crypto adoption has nothing to do with financial contingencies but with the development of proper practical use cases—which so far have been scarce.”
Bundy agrees: “Self-sovereignty is a crypto illusion.” If the global economy collapses, holding Bitcoin won’t feed you or power your home.
Instead, the industry should focus on real-world asset (RWA) tokenization—backing digital tokens with tangible assets like real estate, commodities, or government bonds. This integration could bridge TradFi and DeFi, making blockchain indispensable rather than optional.
Can We Predict the Unpredictable?
Economic crises are notoriously difficult to forecast. As economist Paul Samuelson once joked, the stock market has “predicted nine of the past five recessions.”
David Yermack of NYU cautions against drawing direct links between global economics and crypto prices: “There’s little theoretical reason to expect one. Any forecast about crypto should probably be independent of global market conditions.”
Elvira Sojli of UNSW Business School adds: “Bank balance sheets are stable. A global crisis isn’t looming—politics is more likely to drag us into one.”
Still, uncertainty remains. While many experts don’t foresee an imminent collapse, preparedness matters.
“While speculative, these predictions can still be useful for risk management,” says Green. They encourage portfolio diversification and hedging strategies.
Frequently Asked Questions
Q: Has crypto ever acted as a safe haven during a financial crisis?
A: Not consistently. While Bitcoin dipped during the 2020 pandemic crash, it rebounded quickly. In 2023, it rose during the SVB collapse—showing potential decoupling under specific conditions.
Q: Will a TradFi crash kill Bitcoin’s bull run?
A: Possibly in the short term. A broad market sell-off would likely drag crypto down initially. However, long-term adoption trends and BTC’s scarcity could fuel recovery and renewed growth.
Q: Is Bitcoin like gold—a hedge against inflation?
A: Not yet proven. Unlike gold, BTC lacks decades of macroeconomic data. Its volatility and speculative nature make it less reliable as an inflation hedge—at least for now.
Q: Can crypto survive without the internet?
A: No. Blockchain networks require internet connectivity and power. Widespread infrastructure failure would halt transactions until services are restored.
Q: Are ETFs making crypto more resilient?
A: Yes. Spot Bitcoin ETFs bring institutional capital and regulatory legitimacy, adding structural stability to the market.
Q: What’s the biggest threat to crypto in a crisis?
A: Loss of trust in digital infrastructure or government crackdowns during emergencies. Without legal recognition or physical access, holdings could become inaccessible.
While external shocks may test crypto’s resilience, its underlying technology and growing adoption suggest it won’t vanish easily. A financial crisis might pause the bull run—but could ultimately accelerate blockchain’s integration into the global financial fabric.
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