The Bears Are Taking Control of Crypto and Stock Markets
The major US stock indexes are confirming downtrends, indicating that the bears are gaining strength in both the crypto and stock markets. October is typically a challenging month for markets, so there may be more losses before any gains.
Will Crypto Markets Follow?
The Nasdaq Composite Index, which is heavily influenced by technology stocks, has formed a new lower low this week, signaling a confirmed downtrend since mid-July. The index has dropped 9% to 13,063 as of September 26.
In addition, the Dow Jones Industrial Average has fallen by 5.6% since August, and the S&P 500 Index has mirrored these moves with a nearly 7% decline since July.
Furthermore, the S&P 500 has dropped significantly since the Federal Reserve removed “recession” from its forecast. The market is now at its lowest level since June.
It’s worth noting that high-profile banks have also revised their recession predictions, but the markets seem to be defying these changes.
A Downturn for Crypto Markets in October?
Crypto markets have shown some correlation with tech stocks this year but have mostly remained in consolidation. They experienced an initial growth spurt in Q1 but have been flat since mid-March. Additionally, they have declined by 19% since their high in mid-April.
October historically tends to be the most volatile month for US and global markets. Given the already confirmed downtrend, it’s likely that both traditional and crypto markets will see further declines next month.
October has a notorious history of market crashes, including significant events like the Bank Panic of 1907, the Stock Market Crash of 1929, and Black Monday in 1987.
Looking back at previous years, the crypto market was relatively flat in October during the bear market of 2022, while the bull market of 2021 saw substantial gains. However, November tends to be a more volatile month for cryptocurrencies.
Hot Take: Brace Yourself for a Turbulent October
As the bears tighten their grip on both crypto and stock markets, it seems likely that October will bring further losses. With a history of market crashes and a confirmed downtrend, it’s important to prepare for increased volatility and potential downside risks. Keep a close eye on market trends and consider adjusting your investment strategy accordingly.
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