Taiwan Stock Market Plunges to Its Worst Performance in 57 Years – Does It Have a Bad Connection with Cryptocurrencies?

On August 5, 2024, The Taiwan stock market witnessed a severe crash marking its worst day in 57 years. The main index, TAIEX, plummeted by 8.6%, erasing substantial investor wealth.

This historic drop was influenced by several factors including global economic uncertainties and regional geopolitical tensions. Major sectors, particularly technology and manufacturing, saw significant losses.

Additionally, the broader market sentiment was impacted by a simultaneous crash in the crypto market, highlighting widespread investor panic and liquidation across financial markets.

Relationship Between Stock and Crypto Market Crashes

The stock and cryptocurrency markets often display similar trends during crashes. When the stock market experiences a significant downfall, the crypto market also tends to follow suit. This is largely due to investor behaviour; when faced with losses in stocks, investors may also sell off their cryptocurrency holdings to limit their overall losses.

It is worth it to know that investor liquidity also plays a crucial role in the relationship between these markets. During times of financial distress, investors often need to access cash quickly. This need for liquidity can drive them to sell off both stocks and cryptocurrencies. Furthermore, both markets can react to the same economic news, such as interest rate changes or geopolitical events, causing them to move in tandem. 

Crypto Market Exposure To Stock Market in Taiwan

In Taiwan, the stock market is well-established and serves as a primary investment vehicle for many individuals and institutions. 

In contrast, the cryptocurrency market is relatively newer and is still gaining traction. While interest in cryptocurrencies is growing, especially among younger investors, overall exposure remains lower compared to traditional stocks.

Many investors in Taiwan are primarily focused on the stock market but are beginning to explore the Bitcoin & Crypto market as an alternative investment way. The increasing popularity of Bitcoin & other digital assets is gradually changing the investment landscape in the Taiwanese jurisdiction. 

As awareness and acceptance of Bitcoin grows, it is likely that more investors in Taiwan will diversify their portfolios to include at least Bitcoin & Ethereum alongside stocks. 

Read also: Goldman Sachs Says It’s Not a Crash, It’s a Healthy Correction: Bitcoin (BTC) to $49k