If some investors are invested in both FANNG and crypto, when they face margin call in the latter they may have to sell the former to cover their position.
I can understand _some_ investors do it, but i'd imagine it's not a majority.
In the scenario I describe, those investors take margin loans to long or short crypto, and when they fail, they sell other assets to cover themselves.
This is just one possibility I describe.
> but i'd imagine it's not a majority.
No one knows. It may take only one institutional investor who lost a gigantic amount of money in crypto trading and were therefore forced to sell stocks to shake the stock market.
2) There are plenty of crypto ETFs, such as GBTC and BITO, where selloffs there could cause liquidations elsewhere.
3) Major companies themselves now have significant crypto holdings. The most famous being Tesla, but investment banks have been piling into it over the past year. SPY's own State Street announced a 425-man team to head a new division last June.
I need someone to explain to me how my S&P 500 blackrock ishares are going to die from crypto. I don't think FAANG, Berkshire, Exxon and Pfitzer are going to notice if all of crypto dropped to zero right now.