In recent years, Bitcoin shows a close correlation with stock indices, making it vulnerable to changes in market sentiment.
Bitcoin and Stock Market Correlation
According to economist Henrik Zeberg, Bitcoin moves in tandem with high-growth tech stocks. He notes that the cryptocurrency is sensitive to changes in the Nasdaq index. 'Cryptocurrency... is vulnerable when sentiment shifts to negative,' he stated.
Market Overvaluation
Zeberg points to what he calls a 'second technology bubble' fueled by investor enthusiasm and soaring valuations. He highlights that the U.S. market cap-to-GDP ratio now exceeds historical averages, leading to overvaluation of both Bitcoin and equities.
Warnings about Possible Correction
Currently, Bitcoin remains stable above $110,000, while equities reach fresh highs. However, Zeberg warns that this phase may represent the final stretch of the rally, and a sharp downturn in equities could trigger a cascading sell-off in the crypto space.
Market analysis indicates that cryptocurrencies like Bitcoin remain vulnerable to external economic changes, necessitating caution from investors.
