Many shares have experienced a nice surge since the end of May, breaking a new record for the American S&P 500 stock index. Meanwhile, the price of bitcoin has taken a significant tumble, with signs indicating it may not be over yet. According to Stifel, a leading American investment bank, the decline of bitcoin is bad news for the stock market.
The largest cryptocurrency has been highly correlated with the NASDAQ, the technology-focused stock exchange, since 2020. This correlation is evident in its 11% decline over the past two weeks, causing the price to drop to around $63,500 from its peak of nearly $72,000. The S&P 500 index opened on Thursday at a record high of around 5,500 points.
The NASDAQ also reached a record high on Thursday, thanks in part to the optimism surrounding chip designer Nvidia, which became the world’s largest company after surpassing Microsoft. Many other tech companies are also benefiting from this hype. However, according to Stifel, there are many reasons to be cautious, and investors may soon realize that Nvidia has become overvalued.
The same factors that could cause bitcoin to fall further, such as high inflation in the US and subsequent high interest rates, could also negatively impact the NASDAQ 100 and S&P 500 indexes. However, if interest rates need to be lowered quickly to address the weakening American economy, this could actually bode well for bitcoin.
There are signs that the economy may not be as strong as it seems. Inflation data suggests there may be little room to keep interest rates high, and new economic data indicates that the economy is starting to weaken. If interest rates are lowered to address these issues, it could bring a more positive outlook for bitcoin.
Economy increasingly favorable for Bitcoin, important dates coming
