Securities trader and analyst Alessio Rastani says the markets are giving a warning signal that can cause trouble for Bitcoin (BTC).
In his recent market review, Rastani explains why the bond market is a reliable indicator of stock market performance.
“Bonds are usually bought and sold by large institutions, large funds. Therefore, what these big institutions do and how they bet on the bond market is very important. Usually, we see signs or warnings in the bond market before seeing it on real exchanges. ”
Rastani underlines that stocks and bonds often go in the opposite direction as they are seen as a risk to the stock market. However, as of late, both stocks and bonds are rising, which is a sinister sign for trader.
“Stock exchanges are actually increasing with the stock market. This is not a good sign, because it means that one of these graphics is not correct. Something is not quite right here… When bonds rise, deflation forces arise, not inflation… Deflation wins and loses inflation. This is pretty bad. ”
Bitcoin (BTC) and S&P Correlation
Trader says that deflation is a grave cycle that starts with decreasing demand and creates decreasing prices, debt defaults, bankruptcies and layoffs, leading to more demand.
As for Bitcoin, Rastani says that king crypto money continues to be tied to exchanges. If the stock market falls, it is likely that BTC will also fit it.
“Due to the correlation between S&P, exchanges and Bitcoin, when the exchanges begin to fix, their withdrawal may also affect Bitcoin. We have previously seen how Bitcoin and stock exchanges act together.
When S&P has a big retreat, I think we can see a similar retreat, a big, deep correction in Bitcoin price after having a big retreat or correction. ”