Crypto Analyst Warns of Potential Bitcoin Correction
Crypto analyst Justin Bennett is cautioning Bitcoin investors about a potential correction in the flagship cryptocurrency. Bennett explains that based on the historical correlation between BTC and stocks, Bitcoin could correct by 54% from its current level if there is a steep stock market correction. He points to the example of February and March 2020, when the S&P 500 index plummeted by 25% and Bitcoin fell by around 50%. Bennett believes that BTC could drop to as low as $15,000 or even $25,000.
Bitcoin’s Vulnerability to Stock Market Movements
According to Bennett, a significant correction in the S&P 500 index to around 3,255 points could trigger a Bitcoin collapse. This level was previously a resistance level but has since become a support level. The alignment with the index’s long-term ascending trend line reinforces this prediction. Currently, Bitcoin is trading at $34,050 while the S&P 500 index stands at approximately 4,170 points.
Temporary Divergence between Bitcoin and Equities
Bennett acknowledges that Bitcoin has shown “exceptional strength against equities” recently but emphasizes that this divergence is not permanent. He notes that correlations between different assets ebb and flow over time. Therefore, if there is a significant downturn in equities, it is only a matter of time before crypto follows suit.
Hot Take: Potential Bitcoin Correction Looms
Justin Bennett warns of a possible correction in Bitcoin’s price due to its historical correlation with the stock market. Based on past events, he suggests that BTC could decline by 54% if there is a steep correction in stocks. Bennett sees the S&P 500 index falling to around 3,255 points, which could trigger a collapse in Bitcoin. While the current strength of BTC against equities is notable, Bennett believes that correlations between assets are not permanent. Therefore, if equities experience a downturn, it is likely that crypto will follow suit.
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