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

Nuveen's Bob Doll on inflation and the market

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.

Strategist Bob Doll reveals his take on bitcoin, the market in 2018 and more