A prominent American economist has identified a concerning relationship between NASDAQ performance and Bitcoin valuation, warning that the cryptocurrency could face a catastrophic collapse if current market trends continue.

Peter Schiff, a well-known Bitcoin skeptic, detailed his analysis in a social media post highlighting what he describes as a consistent correlation between NASDAQ movements and Bitcoin prices. "If NASDAQ goes down, Bitcoin follows," Schiff told his followers on X, formerly Twitter, suggesting the current market correction could signal trouble for cryptocurrency investors.

The economist pointed to the current 12% NASDAQ decline as a troubling indicator. "If this correction turns out to be a bear market, and the correlation where a 12% decline in the NASDAQ equates to a 24% decline in Bitcoin holds, when the NASDAQ is down 20%, Bitcoin will be about $65K," he wrote on March 16.

Schiff's analysis becomes considerably more pessimistic when examining historical precedent. He noted three significant NASDAQ downturns: the Dot-com bubble burst which saw an 80% plunge, the 2008 financial crisis driving a 55% drop, and the pandemic-induced 30% decline in 2020.

"The average of those three bear markets is a 55% decline," Schiff calculated. "If this bear market bottoms with just a 40% decline, that would put Bitcoin at about $20K. However, my bet would be that a drop of that magnitude would accelerate Bitcoin's collapse to much lower levels."

In stark contrast to his Bitcoin outlook, Schiff offered a bullish perspective on gold. He identified what he claims is a negative correlation between NASDAQ and the precious metal, noting that since NASDAQ peaked in December 2023, gold has increased by 13%. This represents what Schiff describes as "an almost perfect 1-to-1 correlation."

"If that correlation holds too, a 40% drop in the NASDAQ would put gold over $3,800," Schiff predicted. "However, my guess is that if a bear market in stocks coincides with a significant decline in the dollar on foreign exchange markets, gold will rise much higher."

The economist's most damning prediction suggests Bitcoin could lose 85% of its value when measured against gold, potentially undermining its proposition as a store of value.

"Even if gold were at $3,800 gold and Bitcoin was at $20,000, in terms of gold, the firstborn crypto would decrease by 85%," he argued.

Such a collapse would have widespread implications, according to Schiff. "There will clearly be no justification for the US government or any state government to keep any Bitcoin in a Strategic Reserve. There will also be no reason for ETF investors to keep holding their positions either," he wrote.

Schiff concluded with a dire warning for major institutional Bitcoin holder MicroStrategy: "With all that selling, it will be impossible for $MSTR to sell enough Bitcoin to avoid bankruptcy."

Bitcoin traded at approximately $82,433 with a market capitalization exceeding $1.6 trillion at the time of writing.