Bitcoin’s monster rally could be heading straight into a wall. That’s the warning coming from Piper Sandler this week, as chief investment strategist Michael Kantrowitz told investors to start locking in gains.
In a note published Tuesday, Michael said the firm is advising clients to take profits on positions that have surged the most since early April.
The warning comes as markets move from pricing in a potential inflation-fueled recession to expecting a so-called “Goldilocks” environment, where growth isn’t too hot or too cold.
According to Piper Sandler, the stocks sitting in the most dangerous spot right now are high-beta, low-quality names. Michael said they’ve enjoyed “huge multiple expansion without any improvement in the earnings outlook.”
And Bitcoin is not exempt from the risks piling up. In that same note, he pointed out that there’s still a “very tight directional correlation [with] equity market risk,” and warned that “if we do get a sell-off in risk on assets, for any macro risk that gets priced in, Bitcoin would likely decline as well over the near term.”
Tight equity correlation adds pressure on Bitcoin ahead of August
Since bottoming out on April 9,…
