Equities and technology stocks have felt the effect of Bitcoin’s correction, according to Wells Fargo.
Bitcoin has largely bounced back from a monumental correction after reaching an all time high in December – but not without stock markets feeling the crunch. Having hit the $20,000 mark on December 17, Bitcoin and other cryptocurrencies endured massive drops. Altogether, the cryptocurrency market dropped $200 bln in market cap in the space of 48 hours.
Speaking to CNBC, Wells Fargo’s head of equity strategy Chris Harvey said that technology companies and equities could well feel the effects of further corrections going into 2018:
“People have been asking me about speculation in the crypto market and there’s a significant amount of froth. We think that it will come out and spill over – it’s not going to happen in a vacuum and you’re seeing technology down, not a lot but a little bit.”
While his sentiments came before the cryptocurrency market consolidated after Christmas Day, Harvey cautioned that stocks would also bare the brunt of further volatility in the cyptocurrency market:
“At the end of the day what we’re worried about is froth coming out of that market and starting to affect equities. We’re seeing it a little bit but not to a large degree – but it’s something to watch out for in 2018.”
Big players still coming
Foreboding predictions like Harvey’s are not unfounded, as a number of technology companies have vested interests in the cryptocurrency market. A quick glance at Nvidia’s stock price shows a $6 drop alongside Bitcoin’s falling price in the most recent correction.
Correlation does not imply causation, so it’s uncertain whether the drop in Bitcoin’s price necessarily led to Nvidia’s dip. However, the GPU manufacturer’s top graphics cards are favourites among hobby miners, particularly in the altcoin space.
Mike Novogratz postponed the launch of a $500 mln cryptocurrency hedge fund in the wake of the pre-Christmas dip. Others may have gotten cold feet as well, but it is still likely we see the NASDAQ and Goldman Sachs enter the market in 2018.
Go to Source
Author: Gareth Jenkinson