Short Bitcoin? Stock Market vs Altcoins w/ Gareth Soloway
The S&P 500 recently hit the 5000 level, leading some to speculate we may be entering a new bull market era. However, trader Gareth Soloway warns the index's leadership has become dangerously thin and narrow.
Soloway points out only the technology sector within the S&P 500 is currently trading at new highs. Heavy concentration in a handful of large tech stocks like Apple, Microsoft and Nvidia has propelled the broader index upward.
But this lack of participation across sectors concerns Soloway. He notes previous times when an index became overly dependent on a few stocks, like the Nifty Fifty period of the 1960s, often preceded major corrections.
In particular, Soloway highlights Apple as one stock showing signs of fading momentum. Its recent drift downward from all-time highs could foreshadow broader weakness if other tech leaders follow suit.
To Soloway, the S&P 500 chart itself flashes warning signs with its tight trading range. A break below the lower boundary around 4800 could kick off algorithmic selling and lead to a sharp leg downward. For now, he recommends investors take a cautious approach to the market while awaiting clearer direction.
Bitcoin Tied to Stocks For Now But Decoupling Expected
The crypto market remains closely correlated with stocks for the moment, explains Gareth Soloway. With the S&P 500 hitting new highs, risk assets like Bitcoin have benefited.
But Soloway believes this relationship will slowly decouple over time as cryptocurrency gains mainstream adoption. He points to the launch of the first U.S. Bitcoin spot ETF as a major step in this process.
Still, Soloway cautions a 20-30% correction in stocks could send Bitcoin down to the $30,000-32,000 range in the near-term. This highlights the two assets still share common risks tied to investor sentiment and liquidity flows.
Looking farther ahead though, Soloway sees Bitcoin's future untethered from traditional markets. Continued institutional investment into crypto should help drive this decoupling.
Guest: Gareth Soloway Chief Market Strategist of InTheMoneyStocks.com
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