Bitcoin’s speculative nature could help point out a stock market bottom, strategists at investment bank Stifel Financial Corp. said in a report on Markets Insider.
Stifel Managing Director and Market Strategist Barry Bannister believes that Bitcoin is “late” to the capitulation in risk, and its predicted washout could assist in identifying a low in equities.
Bannister noted that stocks thrive on excess liquidity and that tighter financial conditions could drag Bitcoin further, with the major digital token seen to fall below $30,000 before dropping further to as low as $15,000.
Bannister also noted Bitcoin’s sensitivity to economic growth, citing its tendency to decline along with the drop in manufacturing output. This could indicate a further decline, with the PMI expected to record another decline in the third quarter.
The strategist noted that while he expects a slight decline for equities, Bitcoin is seen to record a bigger downside.