Investment bank Piper Sandler has issued a warning regarding risks associated with Bitcoin, predicting a potential decline in its price in the coming weeks.
Piper Sandler's Warning About Bitcoin
Michael Kantrowitz, chief investment strategist at Piper Sandler, warned in an investment note that profits should be taken from stocks that have risen significantly during the ongoing rally since March. He noted that 'markets have shifted from an inflationary recession scenario to what is now being described as a 'Goldilocks' economic outlook, neither too hot nor too cold.'
Comparison with Stock Markets
Kantrowitz stated that Bitcoin has a high degree of correlation with risk appetite in the equity markets. 'Therefore, any sell-off in which a macroeconomic risk is priced in is likely to lead to a decline in Bitcoin in the short term,' he said. Bitcoin, which has gained 54% since its market bottom in April, reached all-time highs last week.
Bitcoin's Outlook
Kantrowitz pointed out that August is historically considered a weak month for both Bitcoin and stocks due to the decline in trading volume during summer months. He emphasized that his warnings are not a general negative outlook for US stock markets, adding, 'This is more of a tactical move for risk management. While valuations are expensive, we expect earnings to continue supporting stock gains, but with less speculative leadership.'
Thus, Piper Sandler cautions investors about the risks associated with Bitcoin, highlighting its dependence on stock markets and the overall macroeconomic environment.
