The high correlation between stocks and bitcoin could crash the price of BTC 25 to 35%.
According to Santiment data analyst Vlad Antonov, the growing positive correlation between bitcoin and stocks is concerning for an eventual market crash.
In a note, Antonov explained that PayPal’s massive announcement to offer bitcoin services was the primary catalyst for the current price rally above $15,000. However, the sustained price run can be primarily attributed to bitcoin’s correlation with the stock market.
Antonov pointed to a mounting divergence between daily active addresses and price, which he called alarming for a bearish correction. He said the high divergence was indicative of a severe and rapid correction on the horizon, despite being unable to predict when it would occur.
He wrote,
As for Bitcoin, I still hold my ground and think that BTC will go through a 25-35% correction but it’s much more difficult to make a precise call on when to expect it.
Antonov continued, saying positive market reaction to COVID-19 vaccine trials and Joe Biden’s successful presidential bid were buoying the price of bitcoin.
He concluded by predicting the stock market to undergo a correction within the next two to three months, which would result in bitcoin prices being slashed by a quarter or more.
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