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If the bitcoin boom goes bust, the stock market could see collateral damage, analyst Bob Doll says

Mainstream market forecasters are taking a serious look at the bitcoin boom — noting a bust could cause collateral damage in the stock market.

Nuveen Asset Management's Bob Doll is one of them. He acknowledges that a potential cryptocurrency crash could have a spillover effect, even though it's not included in his official 2018 stock market forecast.

"It's sort of been until recently pretty isolated. We can't have a conversation without bitcoin showing up," the firm's chief equity strategist said Wednesday on CNBC's "Trading Nation." "Somebody will get scared if bitcoin drops by 30 percent in a short period of time."

He believes the longer the bitcoin mania goes, and the bigger it gets — the worse it is for the stock market. Doll sees it creating jitters "even though the fundamental overflow is pretty nonexistent."

Right now, Doll's annual forecast calls for more gains. He has a year-end price target of 2,800 on the S&P 500. That's about 5 percent higher from current levels.

His biggest economic-related risk to the rally is inflation. Doll says he isn't seeing hints of it yet but is conscious of the negative role it will eventually play.

"A little bit of inflation is good for the revenue line. When it becomes evident that the Fed has to sit on it by becoming punitive and raising rates faster than the curve suggests, that's when we worry," said Doll. "That's when we tend to get the inverted yield curve. They are in our future."

The Federal Reserve on Wednesday nudged up its federal funds rate by a quarter point, the fifth rate hike since December 2015.

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Trading Nation is a multimedia financial news program that shows investors and traders how to use the news of the day to their advantage. This is where experts from across the financial world – including macro strategists, technical analysts, stock-pickers, and traders who specialize in options, currencies, and fixed income – come together to find the best ways to capitalize on recent developments in the market. Trading Nation: Where headlines become opportunities.

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Sara Eisen joined CNBC in December 2013 as a correspondent, focusing on the global consumer. She is co-anchor of the 10AM ET hour of CNBC's "Squawk on the Street" (M-F, 9AM-11AM ET), broadcast from Post 9 at the New York Stock Exchange.

In March 2018, Eisen was named co-anchor of CNBC's "Power Lunch" (M-F, 1PM-3PM ET), which broadcasts from CNBC Global Headquarters in Englewood Cliffs, N.J.

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