Bitcoin’s future could be at risk if the Nasdaq 100 experiences a major downturn, according to a stark warning from Danish economist Henrik Zeberg. He cautions that Bitcoin, often seen as a high-risk, high-reward asset, is closely aligned with the broader tech-driven market. As such, a sharp correction in the Nasdaq could trigger a significant decline in Bitcoin prices [1].
Zeberg points out that the U.S. stock market is currently in a bubble-like state, with valuations exceeding those seen before the 2007 financial crisis. This is reflected in the market capitalization-to-GDP ratio, which has climbed to historically high levels. He argues that such conditions create an environment where speculative trading is rampant, and when investor sentiment shifts, the consequences can be severe [1].
The economist emphasizes the strong correlation between Bitcoin and the Nasdaq, noting that both are considered “risk-on” assets. When markets are buoyed by optimism, prices rise, but when the mood turns negative, they can fall just as fast. This dynamic is compounded by liquidity fluctuations, which can amplify price swings in both markets [1].
Zeberg also highlights the close relationship between Bitcoin and the technology sector, noting that the cryptocurrency has become deeply embedded in the same investment ecosystem. He warns that if the Nasdaq bubble bursts, cryptocurrencies will not be immune to the fallout [1].
Currently, the Nasdaq 100 has reached an intraday high of 21,464 points, while Bitcoin trades near an all-time high of $118,336. However, Zeberg urges investors to remain cautious, as such peaks could quickly reverse if market conditions deteriorate. He cautions against being swept up in the euphoria that often accompanies bullish trends, especially in highly speculative environments [1].
The warning underscores the idea that Bitcoin’s performance is closely tied to the broader health of the tech sector. Should the Nasdaq experience a significant correction, investors could face substantial losses not only in traditional stocks but also in cryptocurrencies like Bitcoin [1].
Given these risks, investors are being advised to pay close attention to traditional market indicators, including the performance of the Nasdaq, as part of a diversified investment strategy. The current alignment between crypto and traditional markets may not last if broader market conditions shift [1].
Source: [1] Bitcoin Could Plunge as Nasdaq Bubble Bursts, Economist Issues Stark Warning (https://coinmarketcap.com/community/articles/6898c1fad2aecc707a2ad88e/)
