It seems to be a good time for the international financial markets. Well, after one of its worst falls when the Coronavirus arrived in the West in mid-March, the stock market has been rapidly recovering its value. However, this growth may not be as sustainable as one might think. This is why some analysts are warning of a possible bubble on Wall Street, which could affect the Bitcoin market.
Is Bitcoin worth buying?
The correlation between Wall Street and Bitcoin
This is undoubtedly one of the most controversial issues within the crypto market today. For many, there is no doubt that there is no correlation between Bitcoin and the stock market on Wall Street. On the contrary, many analysts argue that the BTC is an active store of value. In other words, the price of cryptomoney has no direct relationship with the global financial markets, its price remaining firm even in the face of a fall in those markets.
However, especially during the Coronavirus crisis, there are more and more voices pointing out the correlation between Bitcoin’s price and Wall Street’s performance. A relationship that, according to analysts such as the twitterer known as PlanB, would have existed for several years, and would be the most important data for understanding the cryptomoney market.
If this is true, the fall and subsequent recovery in the price of Bitcoin after the arrival of the Coronavirus to the Western world, would have been a direct consequence of the same phenomena that led to the collapse and boom of the financial market in that same period of time. Therefore, the risk of a bubble in Nasdaq would be dangerous for Bitcoin.
The implied price of Bitcoin could be $25,000
The bubble in the market
And this is precisely the theory that is being promoted by various financial market analysts such as Ned Davis. Who has already warned that a bubble is forming on Wall Street, pointing especially to the shares of technology companies as the most risky at this time:
„Valuations of technology companies are the most extreme seen since the 2000 technology bubble, based on the relationship between the Nasdaq and small-cap stocks (…) the Nasdaq 100 seems to me to be bubbling. If this is not a sign of speculation, I don’t know what is.
This coincides with other voices that have been warning for months that the money injection by the Federal Reserve has gone straight to Wall Street. Where they have caused stock Iq Option prices to rise, even as the real economy crunches under the effects of the Coronavirus.
For this reason, those who postulate that there is a strong correlation between Wall Street and the price of Bitcoin are right. When the stock market bubble bursts, the price of BTC will also fall dramatically. A possibility that becomes our Tip of the Day here at CryptoTrend.