A well-known American economist, Peter Schiff, suggests a significant correlation between gold, NASDAQ, and Bitcoin. He emphasizes that a decline in NASDAQ typically leads to a decrease in the price of Bitcoin. Schiff, a notable skeptic of Bitcoin, shared his insights on the current market conditions and their potential impact on the flagship cryptocurrency.
In his latest analysis, Schiff indicates that the financial market’s bearish trends could profoundly affect Bitcoin’s value. He recently tweeted about the current state of the NASDAQ, which is already down by 12%. According to Schiff, should NASDAQ enter a bear market, it could trigger massive sell-offs in Bitcoin, stating, “If this correction turns out to be a bear market, a 12% decline in NASDAQ equates to a 24% drop in Bitcoin, potentially driving it down to around $65K if NASDAQ drops 20%.”
“The NASDAQ is down 12%. If this correction turns out to be a bear market, Bitcoin may follow suit with alarming consequences.”
Schiff supports his predictions by referencing past market downturns. For example, after the Dot-com bubble burst, NASDAQ plummeted by nearly 80%, and it dropped by 55% during the 2008 global financial crisis. In the pandemic crash of 2020, NASDAQ experienced a decrease of approximately 30%. Schiff notes, “The average decline from these periods is around 55%. If we only see a 40% drop this time, Bitcoin could fall to about $20K.” He warns, however, that such a decline would likely accelerate Bitcoin’s collapse to even lower levels.
While Schiff’s outlook on Bitcoin remains dubious, he offers a more favorable view of gold, highlighting its negative correlation with NASDAQ. Since the NASDAQ’s peak on December 16, 2023, gold has surged by 13%. If this trend continues, a potential 40% drop in the NASDAQ could elevate gold’s price to over $3,800. Interestingly, Schiff hypothesizes that if we observe a bear market in stocks alongside a decline in the dollar, gold may soar even higher.
In comparing Bitcoin to gold, Schiff forecasts a stark difference in their trajectories. He remarked that even with gold reaching $3,800 and Bitcoin dropping to $20,000, Bitcoin could still appear vastly inferior, declining by 85% in comparison to gold. He asserts, “There will be no justification for the US government or any state government to maintain Bitcoin in a Strategic Reserve. ETF investors may also divest, leading to massive sell-offs that could impact Bitcoin’s future severely.”
As of now, Bitcoin is trading at approximately $82,433, boasting a market cap surpassing $1.6 trillion.
The volatility of Bitcoin shadows that of traditional markets, prompting investors to consider the implications of such market movements on their portfolios.
