Crypto analyst and trader Justin Bennett issued a warning for Bitcoin (BTC), which attracted attention with double-digit gains last week. According to the analyst, the largest cryptocurrency could experience a sharp drop.
Bennett’s 54% Decline Forecast for Bitcoin
Based on the historical correlation between Bitcoin and stocks, Bennett stated that the largest cryptocurrency could drop by 54% from its current level. According to the analyst, a sharp decline in the stock market could trigger a Bitcoin crash similar to the one seen in February and March 2020, when the S&P 500 stock index dropped by 25%.
During that period, Bitcoin’s price dropped by approximately 50% from $10,500 to $3,782:
I believe BTC will still sweep its previous low levels of $25,000 and probably $15,000. It’s hard to believe until it happens, but how do you think a 23% correction in the S&P 500, up until the 3,255 region, would affect Bitcoin? It’s impossible to know for sure, but we know what happened during the last 25% correction.
Bennett’s forecast suggests that the S&P 500 index will drop to around 3,255, which served as a resistance barrier in front of the index throughout 2020 before turning into a support level in 2021. According to the graph shared by Bennett, the 3,255 level aligns with the index’s long-term upward trend line, which adds to its attractiveness.
The Divergence Between Bitcoin and Stocks is Not Permanent, According to the Analyst
Despite Bitcoin’s exceptional performance against the stock market this month, Bennett emphasized that correlations, like markets, are volatile and the divergence is not permanent. According to the analyst, the divergence between Bitcoin and stocks is temporary, and the correlation will soon return to normal:
If stocks go down from here, the cryptocurrency market will follow. It’s just a matter of time.
