Wells Fargo, anticipates that corporate pensions in the United States will move some $35 billion into fixed income. Analysts believe this could cause a sharp sell-off in the stock market and, given the correlation between Bitcoin and stocks, this could leave BTC vulnerable to a setback.
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KKM Financial’s managing director, Dan Deming, also warned that increased volatility in the stock market could lead to a drop in several risky assets.
Will Bitcoin fall along with stocks?
Since the end of March, the trend in Bitcoin prices and the S&P 500 index have shown a surprisingly similar correlation, and Skew data shows that the price of Bitcoin recovered with the U.S. stock market in the last three months.
Similarly, Bitcoin began to plummet in the first week of June when stocks fell.
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Wells Fargo and KKM believe that stocks will correct mainly because pension funds and other institutional investors may be preparing to make profits after a massive stock market recovery.
The same argument for a reversal can be applied to Bitcoin, which experienced a 159% upward trend, taking its price from $3,600 to $9,330 since March 13.
„The end of the quarter will be quite interesting, given how much the market has moved during this quarter. There could be volatility here, we have seen that already and there is potential for more as we move towards the end of the second quarter.
While stock market fears continue to grow about the likelihood of a sell-off, the cryptomarket expects a record $930 million in Bitcoin and Ether options that will expire on June 26.
The options contracts give investors the right to buy Bitcoin at a specific price and date that was previously agreed upon. As they expire, there could be an increase in buying and selling volumes as well as a sharp increase in volatility.
Sales by BTC miners remains a threat
In addition to the expected increase in volatility, another variable in the short-term price trend of Bitcoin is the abrupt increase in selling pressure from miners.
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After a two-year high adjustment in the mining difficulty, the miners have started selling Bitcoin again. The miners‘ sales are one major source of external pressure on BTC, and the other is the settlement of commissions by the exchanges.
As the price of Bitcoin fell below $9,300 today, CryptoQuant CEO Ki Young-ju said:
„If you know when the miner sends money to the exchanges, you can define when the price of BTC will fall. The amount of BTC sent doesn’t matter when you look at Miner’s flows to the exchange.“