Bitcoin has been loosely correlated with the S&P 500 and other major stock market indexes. Therefore, JPMorgan’s recent prediction may indicate that Bitcoin could see some strong months ahead.
According to new probabilistic models by JPMorgan Chase, fears of a recession have subsided and we may see a new high in the stock market in 2020.
JPMorgan Finds Recession Fears Receding
JPMorgan Asset Management has just upgraded its outlook and its surprisingly good. According to the banking giant, the U.S. and China are getting closer to a trade agreement and fears of a recession have receded.
Although the bank was still cautious on the stock market, they have moved their assessment to ‘neutral’ on the market overall. The prediction is that stocks will see single-digit returns in 2020. JPMorgan is most optimistic about large-cap equities and other emerging markets, as reported by Bloomberg.
As Patrik Schowitz, the bank’s global multi-asset strategist, told Bloomberg: investors have been “regaining their appetite for risk” given that the environment has shifted drastically in just the past few weeks. Currently, the MSCI All Country World Index is less than a percent away from an all-time high.
If Stocks Rise, Bitcoin Could Follow
Tom Lee from Fundstrat has repeatedly argued, based on his statistical models, that one of the major predictors of Bitcoin’s price is the stock market. He argues that Bitcoin won’t reach a new all-time high until the S&P 500 does, as BeInCrypto previously reported.
“Once equities break to an all-time high, Bitcoin becomes a risk-on asset,” Lee told CNBC in September.
Lee backs his prediction based on the fact that the best years for Bitcoin have coincided with the best years for the S&P500. Because Bitcoin is far too risky and small to weather a recession, it needs stocks to remain stable so that it can continue to grow. Luckily, given JPMorgan’s recent assessment, it seems that Bitcoin will be in safe territory for the time being.
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