A Well-Known American Economist Suggested a Relationship Between Gold, NASDAQ and Bitcoin

A well-known American economist suggested a relationship between gold, NASDAQ and Bitcoin, saying that a decline in NASDAQ usually leads to a decrease in Bitcoin.

"A well-known American economist, Peter Schiff, has suggested a relationship between gold, NASDAQ and Bitcoin, saying that a decline in NASDAQ usually leads to a decrease in Bitcoin.,,,

Schiff explained in a post the correlation between the state of Bitcoin and the market situation of NASDAQ, adding that there is a negative relationship between gold and NASDAQ.

"NASDAQ is now down 12%. If this correction turns out to be a bear market, and the correlation where a 12% decline in the NASDAQ equates to a 24% decline in Bitcoin holds, when the NASDAQ is down 20%, Bitcoin will be about $65K. But if the NASDAQ goes into a bear market, history shows that the decline will be much larger," Schiff said.

The economist further stated that after the bursting of the Dot-com bubble, NASDAQ plummeted by nearly 80% while during the 2008 global financial crisis, it dropped by 55%, and, recently, during the pandemic crash in 2020, NASDAQ went down by around 30%.

"The average of those three bear markets is a 55% decline. If this bear market bottoms with just a 40% decline, that would put Bitcoin at about $20K. However, my bet would be that a drop of that magnitude would accelerate Bitcoin’s collapse to much lower levels," he added.

Yellow Metal Continues To Shine

Schiff might have a bearish outlook on Bitcoin but offered a more optimistic view on gold, saying there is a negative relationship between NASDAQ and gold.

"Since the NASDAQ topped on December 16, 2023, gold has risen by 13%, which is an almost perfect 1-to-1 correlation. If that correlation holds too, a 40% drop in the NASDAQ would put gold over $3,800. However, my guess is that if a bear market in stocks coincides with a significant decline in the dollar on foreign exchange markets, gold will rise much higher," he explained in a post.

Gold-Bitcoin Comparison

The economist said that even if gold were at $3,800 gold and Bitcoin was at $20,000, in terms of gold, the firstborn crypto would decrease by 85%, adding that it would more likely end the comparison that Bitcoin is a store of value similar to gold.

"There will clearly be no justification for the US government or any state government to keep any Bitcoin in a Strategic Reserve. There will also be no reason for ETF investors to keep holding their positions either. With all that selling, it will be impossible for $MSTR to sell enough Bitcoin to avoid bankruptcy," said Schiff.

As of writing, Bitcoin is traded at $82,433 with a market cap of over $1.6 trillion.