Alex Krüger, a widely followed economist and cryptanalyst, says he feels a bottom has likely been reached and a volatile move higher may be taking shape.
In a new live broadcast with Scott Melker, Krüger says expects crypto markets to enter a bullish phase.
Krüger says that barring a black swan event, he doesn't see the S&P 500 crashing to $3,000.
Instead, it says that stocks will likely trade within a range, giving Bitcoin (BTC) and crypto markets the opportunity to decorrelate from traditional markets and move higher.
"For me, [predicting a black swan event is] enter crystal ball territory. I can't make the forecast. So that's basically based on that, my ignorance. As for what will happen in that regard, I think it's more likely that equities will remain range bound, constrained by interest rates.
On a historical basis, comparing stocks to rates and actual rates, they're actually quite high. It's definitely a headwind. To me, that means a range cap and basically almost no edge in stocks. What Bitcoin has, what crypto has, [are these] idiosyncratic variables that really, just for brief periods, can cause it to completely decorrelate and go ballistic in either direction, up or down. I'm thinking.
While it remains a long time, Krüger warns that if inflation does not decline further, the Federal Reserve may raise interest rates more than expected, which could drive cryptocurrencies to new lows.
“I think the bottom is in, yes. I'm playing the long side. But I could definitely be wrong. Shit could go through and the bottom could go through. Mainly, inflation could end up being really sticky, as some of the bears say, based on how the US payrolls and labor market is still very active.
So if that doesn't give you some leeway and basic services, basically [if the] the inflation wall doesn't come down as expected, we could see the Fed hike as much as 6.5 percent and then… it would make sense to trade new lows."
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