Market Strategist Predicts 32% Stock Market Crash, How Will This Affect Crypto?

Peter Berezin, chief global strategist at BCA Research, has predicted that the stock market will experience a significant crash by 2025. His prediction is noteworthy, given the impact that a decline in the stock market could have on the crypto market.

Market Expert Predicts 32% Crash In Stock Market

Berezin mentioned in an interview that the S&P 500 will decline by 32% and drop to 3,750 by next year. He explained that this downtrend would occur due to a recession in the US, which he predicts could happen at year-end or early 2025. He claimed that the reduction in consumers’ spending is already hinting at this recession as households have no savings to spend and banks are tightening their lending standards.

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Berezin also alluded to the rising unemployment rate, which he noted shows that the labor market is weakening and hints at an imminent recession. The market strategist warned that the Federal Reserve’s tightening monetary policy will make matters worse as the Central Bank continues to “drag its feet” in cutting interest rates.

A potential decline in the stock market could negatively impact the crypto market, given Bitcoin’s strong positive correlation with the S&P 500 at times. Whenever this happens, Bitcoin’s price, and by extension, the broader crypto market, is known to move in the same direction as the stock market. 

Furthermore, based on Berezin’s analysis, a recession could have the same impact on the crypto market since consumers will have less to invest in Bitcoin and altcoins, which could cause trading volumes to dry up and lead to price declines for these crypto tokens. The crypto market has also shown that it is not immune to macroeconomic factors, considering how it has reacted to the Fed’s decision not to reduce interest rates just yet. 

Some Positive For Bitcoin And The Crypto Market

The US June Consumer Price Index (CPI) inflation data was released on July 11. It provided a positive for Bitcoin and the crypto market, showing that the inflation rate dropped by 0.1% from May and put the annual rate at 3%, the lowest over three years. This development has further strengthened the call for the Fed to cut interest rates, as inflation is cooling off in the country. 

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A cut in interest rates would boost investors’ confidence in investing more capital in risk assets like Bitcoin and other cryptocurrencies. Meanwhile, there is the belief that the Fed could cut interest rates by September if the monthly inflation data continues to show that inflation is slowing in the country. 

At the time of writing, Bitcoin is trading at around $57,000, down almost 2% in te last 24 hours, according to data from CoinMarketCap. 

Crypto total market cap from Tradingview.com (Stock market)
Total market recovers from lows | Source: Crypto Total Market Cap on Tradingview.com

Featured image created with Dall.E, chart from Tradingview.com

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