The Nasdaq 100 has dropped by 20% from its peak and is bracing for a bear market. Cryptocurrencies are also feeling the impact of the Nasdaq decline, with stock market losses exceeding 4% today. Following a period of stagnant markets, a time of extreme volatility has begun, and conditions are not favorable for cryptocurrency investors. Bank of America strategist Michael Hartnett and Adam Kobeissi have issued critical warnings regarding market conditions. A pressing question arises: when is the right time to buy cryptocurrencies?
Timing the Cryptocurrency Purchase
Bank of America strategist Michael Hartnett has indicated that declines in stocks, oil prices, bond yields, and the US dollar could heighten market risk appetite. JPMorgan has raised its recession forecast for the United States to 60% this year, while Kalshi is also pricing in a 60% chance of recession in the US by 2025.
The probability of recession could force the Federal Reserve into interest rate cuts, with discussions about five rate reductions for 2025 already in progress. Hartnett recommends aggressive buying in risk markets when the S&P 500 index drops to between 4,800 and 5,000, coinciding with Trump’s support ratings falling to 40-45%. In this scenario, an uptick in cryptocurrency could commence. However, the current outlook is not very promising, especially with the Nasdaq 100 entering bear territory in the short to medium term.
The fear level in the cryptocurrency market has risen to alarming heights, affecting investor sentiment. Short-term investors who have been selling at a loss are partly responsible for the significant declines in altcoins. Currently, there are fewer short-term investors in the market, who are now watching the unfolding events.
Adam Kobeissi has recently highlighted the risk of a major credit crisis.
“The risk of a credit crisis in the US has reached levels similar to the 2023 Regional Banking Crisis.”
As borrowers struggle to meet their debts, a recession hampers the workforce, and high interest rates exacerbate the economy’s challenges, what steps will the Federal Reserve take? Will it maintain its insistence on a 2% inflation target? The answer to this question is crucial for cryptocurrencies. The speed at which the Fed cuts interest rates will influence how soon cryptocurrencies can rebound.
Bullish Crossovers and Cryptocurrencies
Moustache remains among the optimistic cryptocurrency analysts. He recently noted a significant bullish signal in the BTCSPX chart. According to him, the time has come for action.
“Bitcoin
$ 83,271 vs. SPX
Wow, we are finally seeing a 3D bullish crossover (MACD) in the BTC/SPX chart.
Historically, this has signaled a bullish trend for the entire cryptocurrency market 4 out of the last 5 instances over the last two years, marking the strongest rallies.
The current strength is noteworthy.”
