Analytics firm Weiss Crypto Ratings has issued a warning to investors that bitcoin’s price could plummet if the stock market undergoes a downturn.
In a tweet published October 16, Weiss Crypto Ratings warned that bitcoin’s high correlation with the U.S. stock market could lead to price volatility ahead.
The analytics firm pointed to possible economic uncertainty generated by next month’s presidential election, leading to a transfer of headline risk and volatility from the stock market to bitcoin.
A report by IBTimes claims the period leading up to U.S. elections has historically been volatile for traditional markets. Bitcoin and stock prices could experience significant fluctuations while voters wait on a definitive winner to be declared.
According to the report, bitcoin has been noticeably correlated with stocks since March 2020’s total market crash, when both traditional securities and crypto-assets underwent a price plunge in response to COVID-19.
Despite bitcoin tracking stock prices through most of 2020, some analysts anticipate the crypto-asset will eventually make a departure.
Speaking in an interview with CNBC last month, Galaxy Digital founder Mike Novogratz argued bitcoin was a safer investment than stocks and predicted the correlation between the two assets would break down.
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