Part 8/11:
However, there are cautionary flags that temper these bullish narratives. A significant concern is the high correlation of Bitcoin with the NASDAQ, reaching almost 87%. This means Bitcoin is increasingly behaving like a tech stock—vulnerable to broader market corrections—thus undermining its narrative as a safe haven or uncorrelated asset.
Another major risk is stagflation—a scenario in which economic growth stalls while inflation remains stubbornly high. In such an environment, the Fed faces a dilemma: lowering rates could exacerbate inflation, but maintaining high rates risks causing a recession or a collapse in the job market. If stagflation takes hold, corporate profits could decline sharply, and riskiest assets like crypto could suffer significant losses.