Over time, the crypto market has strongly correlated with US equities, and Bitcoin has indicated a significant correlation with S&P 500 index. Similar to stocks, the price of primary crypto assets has also followed the same pattern.
Experts on Bitcoin have made many predictions about the potential outplay of the equity stock. The stock index’s response to macroeconomic challenges is also related to Bitcoin’s.
Market experts provide future forecasts based upon the correlation of the markets. According to Morgan Stanley’s CIO, Michael J. WilsonUS stocks will see an immediate rally of 16% in the short term. According to the bear market expert, price rises are not possible without any official recession and no earning capitulation.
The Short-Term Recovery of Stock Markets and Bitcoin Status
Wilson predicts that the US stock markets will experience a temporary recovery. This offers the possibility of the S&P 500 hitting the 200-weekly moving average (WMA), as per Bloomberg.
This year’s index declined due to adverse macroeconomic conditions, as well as the impact of increased interest rates. The current price movements for Bitcoin are not too encouraging.
BTC’s price currently is below the critical $20K mark. The 200-WMA has also been close to $23k. Despite the short-term rally that Bitcoin experienced in August, Bitcoin has yet to surpass 200-WMA.
After the crypto winter, Bitcoin saw several price rises that brought it below $20,000 per month. The battle appears to be ongoing. The bears have yet to be defeated by the bulls, keeping BTC prices below $20K.
Recall that Wall Street’s most notable prominent bearish voice, Michael Wilson, predicted this year’s decline correctly. He is not fazed by the long-term negative trend in stock markets. He predicts that the short-term price rise will be 16%.
The Wait For Feds’ Next Hike On Rates
The crypto market seems slow. Many traders seem to take their time and do not make any significant transactions. They wait for the Fed FOMC meeting to decide on November 2. Markets will be influenced by the outcome of the Fed FOMC meeting over the coming months.
CME FedWatch Tool reports that there is a 95.4% chance of another 75bps increase. A further move by the Dollar index towards 113 is also evident. Remember that the US Federal Reserve maintained an aggressive stance against inflation control despite rising fears of recession.
From Michael Wilson’s analysis, inflation has hit its peak. Although core CPI data soared to a forty-year peak, the Fed might impose a 50-bps rate hike.
Bitcoin trades at $19,536, which indicates a rise in price of 1.42 percent over the last 24 hours.
Featured image by Pixabay, chart from TradingView.com