YEREVAN (CoinChapter.com) – The US benchmark stock market index, S&P 500 (SPX), surged 10% year-to-date to 4,164 points on Feb 7. However, experts say it is too early for a bull run, and a stall is more likely in the wake of Fed Chair Jerome Powell’s speech. Will Bitcoin follow suit?
Equities Near August’s High
As mentioned, the S&P 500 index managed a 10% uptrend despite headwinds from the global economy. Notably, the stocks nearly reached August highs, charting above the 20,50,100, and 200-day exponential moving averages.
Additionally, SPX jumped 2% as Wall street excitement grew during Powell’s speech on Feb 7. Notably, the excitement fizzled out quickly enough when Powell mentioned the continuous deflationary measures.
The reality is we’re going to react to the data,” Powell said. “So if we continue to get, for example, strong labor market reports or higher inflation reports, it may well be the case that we have do more and raise rates more than is priced in.
said the Chair.
Also read: Bitcoin Price At Risk of Short-term Bearish Breakdown, Dollar Rallies.
Experts Predict a Stall for Stocks amid Market Uncertainty
Meanwhile, banking giant Goldman Sachs predicts a stall amid market uncertainty. However, the bank’s chief U.S. equity strategist David Kostin commented on the uptick, saying it wasn’t likely to last.
A soft landing — and in fact, above-trend growth — is already priced in U.S. equities. Valuations are elevated vs. history and will be constrained by an eventual rise in interest rates. Even avoiding recession, earnings are unlikely to grow substantially in 2023.
Notably, Kostin lifted his year-end S&P500 price target to 4,000 from 3,600. Thus, the target is still not bullish compared to the Feb charts. In addition to the Federal Reserve’s continuous, albeit subsiding hawkish policies, the strategist expected headwinds from the rising debt-ceiling debate.
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Josh Brown, the CEO of Ritholtz Wealth Management, reiterated Goldman Sach’s expectations, pinning the stall on the widely changing rhetoric coming from Powell.
Stocks don’t necessarily have a problem with a 4 or a 5% rate and how long it takes to get there. We can handle that. […] The uncertainty, the jarring, very quick moves in their actions, and the rapid change of rhetoric from one speech to the next. That’s what stocks have a problem with.
commented the expert.
He also noted that the stock market is unlikely to recover unless certainty settles in. Notably, the outlook concurred with earlier remarks from Michael Antonelli, a managing director, and private wealth manager at Baird, a financial services company.
He was also skeptical, saying that to get a “soft landing,” inflation would have to fall significantly, corporate earnings would have to hold up, and the job market would have to stay strong. “The odds of sticking that ‘landing’ is going to be tough — but not impossible,” commented Antonelli.
Will Bitcoin Follow Stocks?
Given Bitcoin’s high dependency on the broader market conditions, the flagship crypto will likely follow the stocks. The chart below illustrates that the digital asset conquered significant down-sloping resistance and soared over 40% year-to-date.
However, the calls for BTC bottom do not trump stall expectations, as the uptrend does not yet signify a bull market, and industry experts agree.
Bill Tai, a venture capitalist and crypto veteran, told CNBC in early January that he sees “a chance that [bitcoin] kind of has bottomed,” with no word on a possible bull run.
Meltem Demirors, chief strategy officer at CoinShares, did not have an overly bullish prognosis either.
She said Bitcoin was likely to be rangebound, trading between $15,000 and $20,000 at the lower end and between $25,000 to $30,000 on the upper end. However, the expert also noted that there wasn’t much money pouring into the digital asset sector at the time.
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Given all the information above, it is unlikely for Bitcoin to conquer the $25,000 resistance with any confidence in the current quarter.
Thus, traders should watch the broader market conditions, the Fed’s policies, and the stock market fluctuations to make a well-balanced decision. As of Feb 8, the trading volumes on the weekly chart were not reassuring for the bulls, showing a cool-off in the segment.
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