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Over time, the crypto market has been highly correlated with US stocks and Bitcoin has indicated a significant correlation with the S&P 500 index. The price of the primary crypto asset has followed a similar pattern as the stock.
Many predictions from BTC experts are based on the possible outplay for the stock. Also, Bitcoin’s response to critical macroeconomic conditions is related to that of the stock index.
Following the correlation between the two markets, some market experts provide predictions for future price trends. According to Morgan Stanley’s CIO, Michael J. Wilson, the US will soon have a short-term rally of 16%. The bear market expert noted that the price surge would only be possible without an official recession or deserved capitulation.
Short-term price recovery in stock markets and Bitcoin status
According to Wilson, the US stock market will recover in the short term. This presents the possibility for the S&P 500 to hit the 200-weekly moving average (WMA), according to Bloomberg.
Due to the unfavorable macroeconomic conditions and the effects of the higher interest rates, the index has fallen this year. However, the current price movement for Bitcoin has not been too impressive.
The BTC price is currently below the critical level of $20K. Also, the 200-WMA is close to the $23k region. Even with its short-term rally in August, Bitcoin is yet to cross the 200-WMA.
Bitcoin has experienced several price surges following the crypto winter that pushed the price below $20,000 in June. But the battle seems endless. The bulls have yet to act more vigorously against the bears, leaving the BTC price still below $20K.
Recall that Wall Street’s most notable, prominent bearish voice, Michael Wilson, correctly predicted this year’s decline. His stance on a general long-term negative trend in the stock market is still undisputed. But currently he predicts a near-term price rally of 16%.
Waiting for the Fed’s next rate hike
The activity in the crypto market seems to be dragging. Most traders take their time with few or no significant trades. Instead, they expect the outcome of the next Fed FOMC meeting on Nov. 2. The decision in the meeting will stimulate the market in the coming months.
A report from the CME FedWatch Tool indicates a 95.4% chance of another 75bps rise. The dollar index is also moving up towards 113. Recall that the US Federal Reserve has maintained an aggressive stance in controlling inflation, despite mounting fears of a recession.
According to Michael Wilson’s analysis, inflation has reached its peak. While core CPI data has risen to a 40-year high, the Fed may impose a 50 basis point rate hike.
At the time of writing, Bitcoin is trading at $19,536, indicating a 1.42% increase in the past 24 hours.
Featured image from Pixabay and chart from TradingView.com