Bitcoin bulls could walk into a $1 billion liquidation trap as Bank of America warns multiples are about to compress

Bank of America suggests that despite strong earnings growth, the S&P 500 is statistically expensive, anticipating P/E compression. This poses a risk to Bitcoin, which has shifted from being a diversification asset to a high-volatility extension of tech equities. The firm highlights potential pressure points like earnings downgrades, increased IPO supply, and rising corporate leverage. Bitcoin's correlation with equities, particularly Nasdaq, has increased, meaning it tends to amplify equity moves downwards. With no inherent cash flow, Bitcoin is sensitive to changes in discount rates and real yields. The introduction of spot Bitcoin ETFs has created a feedback loop where equity weakness leads to outflows and price pressure. Key events to watch include Nvidia's earnings call, the February CPI print, and the upcoming FOMC decision, as these will determine whether the market experiences orderly de-rating, an AI-driven downturn, or macro relief.

(Source：CryptoSlate)