Major stock indexes, cryptocurrencies and precious metals fell in value following flamboyant remarks by Jerome Powell at the annual Jackson Hole Economic Symposium. More than $240 billion was wiped out of the crypto market, and the Crypto Fear & Greed Index continues to slide lower, moving towards “extreme fear”. In addition, Todd ‘Bubba’ Horwitz, chief strategist at bubbatrading.com, points out that a rate hike by the Federal Reserve during a recession will wreak havoc on what remains of America’s middle class.
Stocks and Cryptos Hurt by Fed Chair’s Hawkish Statements – Bitcoin Markets Continue to Show a Strong Correlation With 3 Major Benchmarks
Federal Reserve Chairman Jerome Powell explained that it will take “some time” for the US economy and current price volatility to recover, with the central bank chief saying “some pain” will be felt from the Fed’s tough policy. Following Powell’s statements in Wyoming, Wall Street trembled and all three major benchmarks (S&P 500, Dow Jones, and Nasdaq Composite) were down more than 3% at the closing bell on Friday. The Nasdaq was the biggest loser on Friday, down 3.94% as it posted its worst loss since mid-June.
Markets are a bit more scared, with major indices falling over 3%; Tech took it on the chin with a 4.3% drop; Com Serv & Cons Discr is not far behind… MTD gains are now being snatched away for broader indexes as only Russell 2000 and Russell 2000 growth are up pic.twitter.com/W10NpeIwi3
— Liz Ann Saunders (@LizAnnSaunders) 26 August 2022
The S&P 500 closed down 3.37% at 4,057.66, and the Dow Jones Industrial Average shed more than 1,000 points, or about 3.03%. The world’s top two precious metals, gold (AU) and silver (AU), fell between 1.13% (AU) to 1.79% (AU) to start the weekend. Platinum (Pt) declined 2.38% and palladium (Pd) by 1.49% against the US dollar.
The cryptocurrency market did not behave well with the Fed Chair’s comments as the crypto economy fell 6% on Friday and 4% on Saturday afternoon (EST). During Saturday afternoon trading session (EST), the leading crypto asset bitcoin fell below the $20K per unit zone for the first time since mid-July. On August 19, Bitcoin.com News reported the CFGI rating on the Crypto Fear and Greed Index (CFGI) falling to a score of 33 after rising to a score of 33 on August 14.
The CFGI score today is lower than the 33 recorded nine days ago, as the current CFGI score is 28, or “fear.” Similarly, the Cboe Volatility Index (VIX) saw an increase of 3.78 points after Powell’s ten-minute speech. Nasdaq volatility has shown volatility similar to the VIX volatility gauge. Research shows that the cryptocurrency and bitcoin markets are more closely related to equity markets than ever before.
The price of the cryptocurrency is in sync with that of US stocks, making the relationship between the digital asset and the two major indices, the S&P 500 and the Nasdaq, the strongest since 2010.
The close relationship has turned bitcoin into a version of equity (no #private equity,@Business pic.twitter.com/fMmYoJH2FS
— Mo Hossain (@MoHossain) August 19, 2022
Arcane Research highlighted the correlation in May 2022 when researchers noted: “Bitcoin’s correlation with the S&P 500 also continues to move upwards, currently sitting at 0.59, which is close to an all-time high.” Bitcoin (BTC) is down 71% from its all-time high (ATH) printed on November 10, 2021, and Ethereum (ETH) is down 69.6%. BTC is down more than 80% from its ATH during the last three bear cycles, and ETH is down 90% against the US Dollar.
Market Strategist expects to see 50-60 percent haircut in equity market
Making matters worse, many strategists, analysts and investors believe that global markets are only about to get worse. Todd ‘Bubba’ Horwitz, chief strategist at bubbatrading.com, told David Lin of Kitco during a recent interview that the stock market could fall another 50% from here. Horwitz attributed his forecast to the Fed’s hiking rates, which many believe to be bearish.
Horwitz further said that the financial moves may be linked to the controversial Great Reset. ,[The U.S. central bank is raising rates during a recession,” Horwitz said to Lin. “It’s never been done in history … There is a political agenda behind all of this stuff that’s going on, which is to try to create the Great Reset.” Horwitz further stressed:
[Biden’s] The administration is looking to get the Great Reset. There will be no middle class left.
Horwitz also spoke about Powell’s remarks at the Jackson Hole symposium in Wyoming. The market strategist said: “[Powell’s] The comments are of an idiot,” highlighting that at last year’s symposium, Powell said inflation was transient.
,[Jerome Powell] Trying to get away from what’s going to happen, which is going to be hyperinflation,” Horwitz said. “Wait till the price of oil starts skyrocketing again. What do you think will happen to inflation then? We are going to be short of food this year. We are going to have food riots in many countries,” the strategist said.
The bubbatrading.com analyst concluded that equities would suffer, but there could still be some opportunistic value in the commodity markets. “Overall, I expect 50 to 60 percent of my haircuts in these [equities] market,” Horwitz said. “If one looks at their own finances, they can certainly see that it is a time of recession and they are watching their spending.”
What do you think about the recent stock market trend and crypto correlation? What do you think of Todd ‘Bubba’ Horwitz’s opinion that equities would have a 50% haircut? Let us know what you think about this topic in the comment section below.
image credit: Shutterstock, Pixabay, WikiCommons
Disclaimer: This article is for informational purposes only. It is not a direct offer or solicitation or recommendation or endorsement of an offer to buy or sell any products, services, or companies. Bitcoin.com does not provide investment, tax, legal or accounting advice. Neither the Company nor the author is responsible, directly or indirectly, for any damage or loss alleged to be caused by or in connection with the use or reliance on any materials, goods or services mentioned in this article.