Piper Sandler: bitcoin could fall in price along with stocks in the coming weeks

The rally of the largest cryptocurrency, which recently hit an all-time high thanks to demand from institutional investors, could be replaced by a correction very soon, Piper Sandler has warned. One of the oldest independent investment banks in the United States believes that if investors get spooked again by duties or high interest rates, bitcoin will follow stocks downward.

"There remains a very close correlation between bitcoin and market risk in equities. Therefore, if there is a selloff in risk assets (which includes equities - Oninvest) due to any macroeconomic threat, bitcoin is also likely to decline in the short term," predicted Piper Sandler chief investment strategist Michael Kantrowitz in an analysis

First of all, the most speculative stocks - volatile and with weak fundamentals, Kantrowitz believes, will be hit. In recent months, they have been rising in price without any real improvement in the forecasts for company profits, the analyst recalled. In his opinion, the stock market has not yet built into stock prices a significant risk associated with the approaching deadline for duties on August 1 - in the hope that U.S. President Donald Trump will back down again. However, an unexpected increase in trade barriers could "challenge the current narrative that interest rates will go down in the near term," the Piper Sandler strategist warned.

Kantrowitz recommended taking profits on stocks that have gained the most during the recovery rally since early April. He emphasized that this is more of a tactical measure to manage risk than a pessimistic outlook for the U.S. stock market. It is, he said, more of a "counterintuitive" move - against current market sentiment.

Last week, bitcoin updated the historic high near $123 thousand, after which large-scale profit taking by traders slightly weakened the rate of the main cryptocurrency - to the range of $116 thousand-120 thousand. While traders try to guess the next movement of the crypto market, the co-founder of the Australian cryptocurrency exchange Coins

"If you are analytical, follow patterns and approach things without emotion, you will succeed in the crypto space," he declared in an interview with Cointelegraph. Theodorou expects that the current cycle follows a classic pattern: bitcoin reaches new highs, its dominance peaks, and then traders switch to altcoins.

Last week, bitcoin's share of the cryptocurrency market dropped by 5.8%, falling below 61%. It was the largest weekly decline in nearly three years - since June 2022.

This article was AI-translated and verified by a human editor