All these burnt investors will turn to T bills or gold. When the stock market collapses, risk aversion takes hold. People tend to sell risky assets and cryptocurrencies are definitely considered risky assets. So dont be surprised if an equity crash is followed by a crypto crash.
Exactly, crypto is the king of speculative assets, zero inherent value. When the stock market tanks, crypto will tank right along with it, and more likely harder. The reason is the evaporation of economic confidence. When things begin to fall, people aren't going to have the confidence that this inherently worthless digital token is going to be valued higher by someone else in the future than what you bought it for. Stocks have inherent value; each share is worth the liquidation value of the company, which makes them vastly safer than crypto. Stock market crashes are about a flight to safety and reducing risk, so if money is fleeing far safer assets than crypto, logically I would expect money to flee the riskier assets quicker. That means away from crypto.