Bond King: Next Stock Market Tumble Could Follow a Bitcoin Price Slide

Whether or not Bitcoin’s price movements have anything to do with the movements of stock prices depends on who you ask, it seems.

Several financial players have weighed in on the matter, including famed bond investor Jeff Gundlach who spoke about it on Friday.

Bitcoin as a poster child

Gundlach talked to a panel of finance players on CNBC’s Halftime Report on Friday. As the founder of DoubleLine Capital, and a long-time bond manager, people tend to listen when he weighs in on an issue. In fact, people on the Street call him the Bond King.

Gundlach didn’t mince words when he spoke about Bitcoin, and how the crypto has grown to be somewhat of a measuring stick when it comes to volatility in the equity markets. His comments reflected the sentiment of many who think that Bitcoin is having an effect on the overall financial industry, including stock markets.

"We had a vertical rise [in the stock market] from Sept. 7, which was led and epitomized by Bitcoin. Bitcoin started at about $4,500 and went up to about $20,000 or so. It had been all people wanted to talk about."

Strange bedfellows

Reflecting on Bitcoin’s price moves and the stock market, Gundlach noted that Bitcoin peaked out in mid-December and then crashed.

"That sort of presaged the volatility in the stock market. If stocks are going to take another tumble, I think it would be preceded by a Bitcoin decline. And Bitcoin – while the stock market was having trouble finding its footing – Bitcoin managed to start rallying and advanced, and then the stock market bottomed out."

"So strangely, Bitcoin seems to be the poster child for social mood and market mood. Weirdly, I'm actually using the sentiment regarding speculative assets like Bitcoin as a guide to what the future will bring."

So if stocks are going to take another tumble, “I think it will be preceded by a Bitcoin decline,” Gundlach concluded.