(Markets Insider) Stifel strategist Barry Bannister believes that Bitcoin is late to the capitulation in risk, pointing out that the wash-out that emerges can help spot equity bottoms.
Bannister says that Bitcoin has exhibited strong correlations with tech stocks this year, with its risk-on characteristics providing a great tool to identify the stock lows.
The Stifel strategist believes that the recent declines in Bitcoin are not over yet. He expects the cryptocurrency to break below $30,000 and decline another $10,000 to $15,000.
Bannister points out that as Bitcoin declines further, there will be more downsides for the stock market. He says Bitcoin will fall more due to its speculative nature and lack of underlying fundamentals.
The strategist also noted that Bitcoin is sensitive to GDP, falling whenever the PMI manufacturing index weakens. He says as the PMI faces further decline in the third quarter, making a final capitulatory bitcoin fall a possibility.
Bannister concludes that the S&P 500 will decline 5% to just below 4,000 level. He says that when Bitcoin finds its ultimate bottom, that would sound an alarm for stock buys.
BTCUSD is down -4.88%, SPY is down -2.73%.
