Crypto now braced for an earthquake in March after $200 billion Bitcoin and Ethereum price rally
BitcoinBTC, ethereum and the broader crypto market have become closely linked to the stock market, in part due to a stock rally since early 2023.
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The price of bitcoin rose over the past two months, climbing along with stock markets, with bitcoin, ethereum and other major cryptocurrencies driven by growing expectations that the Federal Reserve may be about to reverse its program of interest rate hikes.
Now, Morgan Stanley MS strategists have said they believe the latest stock market rally is “a bull trap” and predicted March will bring a stock market crash that could drag down the prices of bitcoin, ethereum and other cryptocurrencies.
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“We believe March is a high-risk month for the next leg lower in stocks,” Morgan Stanley analysts led by Michael Wilson wrote in a note seen by Bloombergand points to historical data showing that bear markets often pause between quarterly earnings seasons before falling further.
“Stocks tend to figure it out a month early and trade lower, and this cycle has illustrated that pattern perfectly,” Wilson’s team wrote, adding: “With fundamental uncertainty rarely so high, the technical determine the market’s next big move.”
The bitcoin, ethereum and crypto markets have traded in line with high-growth tech stocks since late 2020, rising to unprecedented highs before suffering an almighty crash as the Federal Reserve began raising interest rates and draining liquidity from the system.
However, Citi researchers have found that bitcoin and crypto’s “correlations with stocks have continued to decline from last year’s highs,” according to a report seen by Coindesk.
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