Bitcoin has notched new records this year as more investors embrace its digital gold narrative – but Piper Sandler warns the crypto is still vulnerable to stock market moves and could stumble in the coming weeks should worries about tariffs or rates hit risk assets. “We recommend taking profits on stocks that have benefitted most from relief rally since early April,” Michael Kantrowitz, Piper Sandler’s chief investment strategist and head of portfolio strategy, said in a note Tuesday. “Markets have flipped from pricing in an inflationary recession on April 8th to a Goldilocks backdrop today. The stocks most at risk after this move are those higher beta, lower-quality names that have seen huge multiple expansion without any improvement in the earnings outlook.” With bitcoin, he added, “there remains a very tight directional correlation [with] equity market risk … thus, if we do get a sell-off in risk on assets, for any macro risk that gets priced in, bitcoin would likely decline as well over the near term.” The flagship cryptocurrency has been one of the top performing assets since the market low on April 9, returning 54% since then and hitting an all-time high as recently as last week . The gains have been fueled by institutional adoption via bitcoin ETFs as well as corporate treasury buying. The S & P 500 has gained half that amount in the same period. Bitcoin investors are no strangers to big drops, but the coin’s maturity has noticeably led to reduced volatility this year, with many of its moves in reaction to broader risk sentiment being smaller than the big swings that made it famous. For example, on April 3, just after President Donald Trump introduced his sweeping tariffs, bitcoin fell 5% compared to the S & P’s 4% decline. Still, the move shows bitcoin nevertheless tends to move in tandem with stocks in periods of broad macro fear and risk-off selling. Piper Sandler says there’s little risk priced in for the Aug. 1 tariff deadline, but surprise to the upside could disrupt the current Goldilocks environment – economic conditions are neither too hot nor too cold – and the firm expects modestly higher consumer price index readings in the next three to four months. That “could complicate the current narrative that interest rates are moving lower in the near term,” Kantrowitz said. August also tends to be a weak month for bitcoin and markets in general, given lower volume amid the summer lull. To be sure, the firm’s recommendation that investors trim their riskiest positions is “more of a contrarian and tactical call for risk management rather than a bearish call on U.S. equities,” Kantrowitz said. “While valuations are expensive, we expect earnings to continue to propel equities higher, albeit with less speculative leadership.” —CNBC’s Michael Bloom contributed reporting.