Stocks are soaring after Federal Reserve Chairman Jerome Powell stoked hopes of a rate cut in September shortly after he issued a “significant” warning.
Subscribe now Crypto and Blockchain Advisor to Forbes And in the aftermath of Bitcoin’s halving, “discover the blockchain blockbuster that’s poised to deliver gains of over 1,000%.”
Even as renewed worries about a debt spiral have unsettled traders, the S&P 500 and Nasdaq have hit fresh all-time highs, following the Dow’s record high in May.
Now, with uncertainty hanging over the White House, one analyst said red flags are starting to flash as the stock market issues an unexpected warning.
Register now for free Encryption Code—A daily 5-minute newsletter for traders, investors and crypto enthusiasts. Stay up to date and get an edge on the Bitcoin and cryptocurrency market bull market.
Federal Reserve Chairman Jerome Powell helped bolster the S&P 500 index, … [+]
Barry Bannister, managing director and chief equity strategist at Stifel, said the recent sell-off in bitcoin and cryptocurrencies has wiped $500 billion from the market in just over a month and could trigger an “imminent S&P 500 summer correction.” Market Watch.
Bannister pointed to the correlation between Bitcoin and the stock market, particularly the tech-heavy Nasdaq in recent years.
“It’s the Fed’s cheap liquidity that drives the price of bitcoin,” Bannister said. “Every dovish shift in the last 13 years has been indicative of a sharp rise in bitcoin, which is a non-interest-paying asset that thrives on low interest rates and liquidity” — much like the stock market.
In his second day of congressional testimony this week, Fed Chairman Jerome Powell said he has “some confidence” that inflation is falling but is not ready to declare the battle against inflation won.
“Bitcoin has been a great leading indicator for the Nasdaq 100 for many years,” Jonathan Krinsky, chief market technologist at BTIG, wrote in a note ahead of this week’s rallies for the S&P 500, Nasdaq and Dow.
Register now Encryption Code— A free daily newsletter for anyone interested in cryptocurrencies
Bitcoin prices have fallen sharply in recent weeks, raising concerns that the stock market will follow suit. … [+]
For now, the momentum is with stocks as traders continue to bet on a Federal Reserve interest rate cut.
“Increasing confidence in a U.S. rate cut kept the market upbeat and led to broad-based stock gains,” Dan Coatsworth, investment analyst at brokerage AJ Bell, said in emailed comments.
