A bitcoin implosion could ‘spill over’ into stocks, warns Wells Fargo

If the cryptocurrency boom goes bust, stocks could easily be dragged into the chaos, Wells Fargo Securities says.

Christopher Harvey, the firm’s head of equity strategy, will be paying close attention to the unprecedented activity in what could be one of the most epic bubbles of all time.

“There will be a significant amount of froth inside the cryptomarkets. We do think in which if in which froth comes out, in which will start to spillover,” he warned on CNBC’s “Trading Nation.”

Bitcoin as well as also its peers have been seeing wild cost swings seen over the past week. Last week, bitcoin lost one-third of its value in an individual day before rebounding. in which capped days of volatility which saw the digital currency surge to a fresh record near $20,000. On Tuesday, in which was above $15,000, according to CoinDesk.

“What we’re worried about will be froth coming out of in which market, as well as also in which’s starting to affect equities,” said Harvey. “You’re seeing in which a little bit, yet just not to a large degree. as well as also, in which’s something to watch out for in 2018.”

Harvey incorporates a 2,863 S&P 500 index year-end cost target for 2018 — about a 6 percent gain through Friday’s close. in which comes far below the 20 percent gains Wall Street has seen This particular year.

“You have to lower your expectations for next year. A lot of Great news will be already priced in, as well as also we just don’t see in which much going forward. in which’ll be a decent market, in which just won’t be a banner year,” he said.

Harvey sees the first half of the year stronger than the second. By then, he predicts, stocks will come up against fresh challenges — whether the cryptomarket implodes or not.

“What the market will have to contend with will be EPS [earnings per share] peaking, ISM potentially peaking, you’re going to hold the yield-curve in all likelihood flattening — as well as also in addition to in which, you’ll likely have multiples start to compress, ” Harvey said. “You’re going to have to scratch as well as also claw to stay afloat for in which to break even.”

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