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Bitcoin And Markets Correlated Says Wells Fargo Chief Strategist

Wells Fargo head of equity strategy, Christopher Harvey, says that if the bitcoin bubble bursts, the stock market may be toast for a while.

Harvey says the two are correlated, noting on Wednesday’s edition of Fast Money “On Monday what we saw is all risk products sell off,” and that as investors lose confidence in one major investment, such as the market, “It sometimes adds fuel to the fire” as people panic out of other asset classes.

Meanwhile, RBC analys Chris Louney sees a “fledgling” negative correlation between bitcoin and gold.

As markets continued to break all-time highs in what looks like a parabolic on a 30-year chart, investors sought alternate asset classes such as cryptocurrencies for the next rocket to the moon. Thus, the euphoria of banking coin in correlated asset classes can consequently lead to despair in both once they begin to go sideways and/or sell off.

Point in case, Monday’s epic 1,175 point selloff in the Dow was accompanied by a devastating rout in Bitcoin, which traded down to $5,947 after hitting all time highs weeks earlier. (Pop!)

“We think of it more as what we have to watch out for, what we have to … tell our clients to be careful of,” Harvey said. “We don’t make a call whether it’s going to go up or down but that it’s a risk in the marketplace, and it’s really far out on the risk spectrum.”

Wells Fargo raised its price target for equities, up about 10 percent over the next year. Its 2018 S&P 500 year-end target is 2,950, compared with the earlier target of 2,863. Cryptocurrencies and the market should trade in correlation over the next three to six months, it said.

“If we’re right, what we should see is risk product going higher,” Harvey said.

“If we’re right and risk starts to be bid again, it wouldn’t surprise us to see a bid in some of the crypto markets,” he said.

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11 comments

  1. sarcrilege

    CNBC and their independent, unbiased, agenda free guests. Yes. The pinnacle of credibility. Uhmm. So no we have our scapegoat. The cryptos. If banksters pull the plug or fuck up, it’s cryptos’ fault. Got it.

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  2. duuuuude

    Seems that area is now where the wildest of leveraged bets are now seeking volatity.

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  3. oilerua

    holy shit it needs to be “chief strategist” to read that bitcoin and markets crashed the same time ????? or that bitcoin and “risk products” have a similar meaning same target of speculative fund

    holy fucking shit…………..

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  4. oilerua

    btw I would take this contrarian

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  5. freak

    Bill Gates said you cant get rid of it, however some people are trying to. bch is now a bettet ber.

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  6. shampoo

    When _ _ _’s can print unlimited money, non stop. What makes you think you have an edge? Sure you play the curves and adjustments, but is that really thoughtful logical trading when they control the direction. The people can throw there money at the waves and wind, but the waves and wind will still go where it damn well wants to. If the people throw more _ _ _ money at it, they print some more to insure the direction of the wind still flows as originally desired. You can fart all you want, the _ _ _ wind goes where it pleases and it not technical or algorithmic, its just _ _ _.

    Tip: Invest in companies that have demonic tones, intentions. Invest in companies that have satanic names and symbols embedded into themes and logos.

    You will do just fine in _ _ _ land.

    I am Shampoo

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  7. shampoo

    ps

    fuck billy cp gates

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