• Morgan Stanley believes that a stock crash could happen in March 2021, which would bring down crypto prices.
• There are optimistic analysts who think the price of Bitcoin will continue to rise regardless of any stock crash.
• Other factors such as reduced inflation and less aggressive interest rate hikes may help bolster the crypto market this year.
Morgan Stanley Predicts a Rocky Period for BTC and Crypto
Morgan Stanley is warning that a massive stock crash could come along soon that may bring the prices of cryptocurrencies like bitcoin down. Despite Tim Draper’s prediction that bitcoin’s price could reach $250K, there is currently no solid evidence to back this up. In 2022, bitcoin fell from an all-time high of $68,000 per unit to $16,600 due to several bankruptcies and the FTX crash.
Citi Claims Crypto Correlation with Stocks Has Thinned Out
Despite this bleak outlook, researchers at Citi have found that the correlation between stocks and crypto has diminished in recent years. This means even if stocks take a tumble, Bitcoin and its altcoin cousins may remain unaffected.
Positive Factors Could Bolster Crypto Market
Samir Kerbage – chief investment officer at Hashdex – believes that improved macroeconomic conditions such as reduced inflation expectations and fewer central bank rate increases could lift risk assets in general this year, providing a positive effect on the crypto market.
Future Prospects Remain Unclear
The future remains uncertain for both stocks and crypto as Michael Wilson has noted: “We think March is a high-risk month for the next leg lower in stocks… With uncertainty on the fundamentals rarely this high, they technical[s] may determine the market’s next big move.“
Cryptocurrencies such as Bitcoin have seen some impressive gains in recent weeks but Morgan Stanley is warning investors about potential risks this month due to a possible stock crash bringing prices down again. While there are optimists who believe these digital assets will continue to climb regardless of what happens with stocks, only time will tell how things play out over the coming months.