Bitcoin Could Plummet 40% If Nasdaq Enters Bear Market, Warns Economist

Economist Peter Schiff has warned that Bitcoin could plummet to $20,000 if the Nasdaq enters a bear market, marking a 40% correction from its peak. This prediction comes as Bitcoin struggles to surpass the $84,000 resistance level, amidst a severe correction in the US stock market.

Schiff's analysis is based on the historical correlation between Bitcoin and the Nasdaq. A 12% decline in the Nasdaq has often resulted in a 24% drop in Bitcoin, which would place it around $65,000. If the Nasdaq were to decline by 20%, Bitcoin could fall to approximately $55,000. Schiff highlighted that the Nasdaq has experienced significant corrections in the past, including an 80% drop during the Dot-com bubble, a 55% decline during the 2008 financial crisis, and a 30% fall during the COVID crash in 2020.

Given these historical precedents, Schiff believes that even a 40% drop in the Nasdaq could push Bitcoin's price down to $20,000. He stated, "A drop of this magnitude would likely accelerate Bitcoin’s collapse to much lower levels." Schiff's prediction aligns with other analysts who have also forecasted a significant decline in Bitcoin's price.

In contrast to Bitcoin, gold has shown a negative correlation with the Nasdaq. Since the Nasdaq peaked in December 2023, gold has risen by 13%, demonstrating an inverse relationship. Schiff suggested that if the Nasdaq were to decline by 40%, gold could surge past $3,800. This increase could be further amplified if a bear market leads to a significant decline in the US Dollar.

Schiff's analysis also touches on the potential impact on Bitcoin's status as "digital gold." He believes that the divergence in value between Bitcoin and gold could challenge Bitcoin's narrative as a store of value, potentially deterring governments or ETF investors from holding Bitcoin in reserves. Schiff added that massive selling pressure could make it difficult for companies like MicroStrategy to liquidate enough Bitcoin to avoid financial distress.

As the market awaits the upcoming US Federal Reserve decision following the cooling US inflation data for February, traders are positioning themselves for potential market movements. The near-term outlook for Bitcoin remains uncertain, with Schiff's predictions adding to the bearish sentiment surrounding the cryptocurrency.