Prominent market expert, John Hussman, known for accurately predicting previous market crashes such as the dot-com crash and the Global Financial Crisis, is once again raising concerns about a potential bear market. According to Hussman’s analysis, two critical indicators for stock market direction, valuations and investor sentiment, are currently giving off alarming signals.
Hussman’s preferred valuation measure, which compares the market cap of nonfinancial stocks to gross value added, indicates that the market is more overvalued now than during both the dot-com bubble and the 2008 financial crisis. Additionally, investor sentiment is worrying due to poor market breadth and cautious trading strategies in response to the uncertain economic landscape. Factors like unresolved debt-ceiling negotiations and unclear Federal Reserve interest rate policies contribute to the nervousness.
This bearish outlook for the stock market might spill over into the crypto market as well. CoinGape reported similar sentiments from JPMorgan Global Head of Equity Macro Research, Dubravko Lakos-Bujas. A crash in the US stock market could affect cryptocurrencies, potentially causing Bitcoin to break its $25,000 support level and reach a new monthly low. Some experts even predict a plummet to $20,000 or lower. Bloomberg’s macro strategist, Mike McGlone, also anticipates a Bitcoin crash coinciding with a stock market downturn, foreseeing a severe correction in most altcoins and a new bear market bottom for Bitcoin’s price.
Even Elon Musk, a well-known crypto advocate, recently advised against purchasing cryptocurrencies in the current uncertain climate. Meanwhile, prominent crypto analyst Michael van de Poppe notes excessive bearish sentiment among retail investors, calling it “insane.” Van de Poppe suggests that investors are stuck in the mindset of 2022, when the crypto market experienced one of its most significant setbacks with the fall of the FTX empire.
The predictions from experts like John Hussman and the shared concerns from other influential figures paint a gloomy picture for both the US equities and the crypto market. If the forecasted bear market rally comes to fruition, the already unstable conditions and cautious investor sentiment could increase the risk of a significant market downturn, affecting various financial instruments, including Bitcoin.
Source: Coingape
