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Wells Fargo strategist: Bitcoin and the market are correlated

If the bitcoin boil bursts, the stock market may go down along with it, said Christopher Harvey, crescendo of equity strategy at Wells Fargo, who sees a correlation between the two.

“On Monday what we saw is all hazard products sell off,” Harvey said Wednesday on CNBC’s “Fast Spondulix.”

A hit on the market, he said, can cause investors to panic and begin selling bitcoin as good-naturedly.

“It sometimes adds fuel to the fire,” Harvey said.

Risk in the marketplace was at a great in extent earlier this year as the stock market rallied, which led to numerous interest from investors who saw the potential for big gains in the crypto market.

“In the end year what you had was money chasing performance,” Harvey said. As volatility discharge up, he said, there was a “massive” demand for liquidity.

Then on Monday, the Dow Jones industrial usually plunged 1,175 points by the end of the day. Bitcoin also fell to one of its lowest nitty-gritties in two months on Monday, trading at $5,947.40.

Harvey said the best gauge for prophesying future market movement and the price of digital currency is simply by assessing the gamble.

“We think of it more as what we have to watch out for, what we have to … reprimand our clients to be careful of,” Harvey said. “We don’t make a call whether it’s contemporary to go up or down but that it’s a risk in the marketplace, and it’s really far out on the risk spectrum.”

Wells Fargo pick through its price target for equities, up about 10 percent over the next year. Its 2018 S&P 500 year-end end is 2,950, compared with the earlier target of 2,863. Cryptocurrencies and the furnish should trade in correlation over the next three to six months, it articulate.

“If we’re right, what we should see is risk product going higher,” Harvey thought.

“If we’re right and risk starts to be bid again, it wouldn’t surprise us to see a bid in some of the crypto exchanges,” he said.

All eyes remained on bitcoin Wednesday as the market began to retrieve. The cryptocurrency was trading above $7,000, even briefly tipping once again $8,000 in the evening.

As the crypto market becomes more regulated some of the gamble should disappear, Harvey said.

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