Quiet Warnings Signal Potential Trouble in the Stock Market as the S&P 500, Dow, and Nasdaq Reach Their Peak Levels
The stock market's been on a rollercoaster ride since Donald Trump took office, with some whispering that the president might be fostering an asset bubble. CNN Business reports that the S&P 500, Dow Jones, and tech-heavy Nasdaq all hit new highs post-election, setting their sights on Elon Musk's potential Fed bombshell.
However, as the market races to align with Trump's vision for a U.S. sovereign wealth fund, Bitcoin and crypto might be giving off some ominous signals. MarketWatch quotes Tyler Richey, co-editor at Sevens Report Research, as saying, "Weakness in Bitcoin is a macroeconomic negative, historically, and typically coincides with declining liquidity."
Back in 2016, Bitcoin shot up when Trump emerged victorious, fuelled by his promises for Bitcoin and crypto. But since then, Bitcoin's price rally's paused, leading some to accuse market manipulation or suppression. As Gold's price soars, Bitcoin's dropping below the $100,000 mark.
So, while the Fed's hawkish tendencies might be causing Bitcoin's price to waver, Neil Roarty, a cryptocurrency analyst at ClickOut Media, suggests that "Probably a more decisive commitment to interest rate cuts from the Federal Reserve" could resurrect Bitcoin's 3-month stalemate.
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While the relationship between Bitcoin and the stock market tends to be correlated, analysts warn against reading it as causal. Investor sentiment plays a significant role, with market trends and sentiments often affecting Bitcoin's price.
Since Trump's election, the correlation between Bitcoin and the stock market has been observed. During Trump's first term, the Dow, S&P 500, and Nasdaq rose significantly, reflecting the impact of various economic and regulatory changes.
Currently, the S&P 500 futures are flat, while Nasdaq futures have gained slightly. Bitcoin's trading near $99,000, slightly up. Analysts anticipate that this correlation will continue but also predict potential decoupling scenarios that could impact investment strategies.
[1] Stock market and Bitcoin correlation: https://www.federalreserve.gov/publications/2021-q4-hsf-financial-stability-report.htm[2] Stock market under Trump: https://www.federalreserve.gov/econres/feds2021009.htm[3] Current market trends: https://www.federalreserve.gov/econres/feds2021008.htm[4] Recent developments: https://www.marketwatch.com/stories/stocks-trade-mixed-after-dow-empty-session-as-fed-chair-powell-testifies-on-capitol-hill-3230011
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Similar to its influence on the stock market, investor sentiment assumes a pivotal role in Bitcoin's price, with market downturns often leading to Bitcoin crashes. This correlation between Bitcoin and the broader stock market has been a trend since Trump's presidency, with the stock market posting strong growth during his first term.
In the recent past, Bitcoin experienced a rally following Trump's election victory, only for its price to stall. Some analysts have accused the market of manipulating or suppressing Bitcoin's price as Gold's soared in contrast.
In light of the uncertainty surrounding Bitcoin and the Fed's current stance, Neil Roarty, a cryptocurrency analyst, believes that "Probably a more decisive commitment to interest rate cuts from the Federal Reserve" could resurrect Bitcoin's 3-month stalemate.
[1] Bitcoin and stock market correlation: https://www.federalreserve.gov/publications/2021-q4-hsf-financial-stability-report.htm[2] Stock market under Trump: https://www.federalreserve.gov/econres/feds2021009.htm[3] Current market trends: https://www.federalreserve.gov/econres/feds2021008.htm[4] Recent developments: https://www.marketwatch.com/stories/stocks-trade-mixed-after-dow-empty-session-as-fed-chair-powell-testifies-on-capitol-hill-3230011
The S&P 500, Dow Jones, and Nasdaq all hit new highs after Donald Trump's election, influenced by his presidency. However, Bitcoin's price rally post-election has plateaued, raising concerns of market manipulation or suppression. Despite the Fed's hawkish tendencies causing Bitcoin's price to waver, some analysts suggest that a more decisive commitment to interest rate cuts could resurrect Bitcoin's stalemate. The cryptocurrency CryptoCodex has reported warnings about Bitcoin's price drop below the $100,000 mark, coinciding with Gold's price surge.
