Investors in stocks may want to pay attention to the daily craziness in the land of cryptcurrencies bitcoin and ripple.
"The most egregiously overvalued sectors [of the stock market] will be hurt if bitcoin were to crash, absolutely there will be contagion," said Danielle DiMartino Booth in an interview with TheStreet. Booth, a former Federal Reserve adviser, pointed to the mid-December crash in bitcoin prices and subsequent pullback in FAANG stocks (Facebook (FB) - Get Report , Amazon (AMZN) - Get Report , Apple (AAPL) - Get Report , Netflix (NFLX) - Get Report and Alphabet (GOOGL) - Get Report ) as a reason that investors must watch crypto prices.
From mid-December to the end of the month, FAANG stocks generally were under pressure and lagged the Dow Jones Industrial Average. The Dow itself was relatively flat during that stretch, as was the S&P 500.
But investors shouldn't be too worried that a bitcoin blow up would trigger a deeper correction in stocks.
"The [market] sell-off would be over pretty quickly, 99% of people who own and trades stocks don't have any bitcoin and never had any bitcoin," said TheStreet's markets columnist and former NYSE floor trader Stephen Guilfoyle.
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