(Kitco News) – Monday was one of the worst days for financial markets in recent history as asset prices from stocks to cryptos and precious metals experienced sharp selloffs. But according to analysts at JPMorgan, things could start to improve in short order as the rotation out of tech might be “mostly done,” presenting an opportunity for those with a higher risk tolerance to buy the dip.
“Overall, we think we’re getting close to a tactical opportunity to buy the dip and our Tactical Positioning Monitor could dip further in the next few days,” wrote John Schlegel, JPMorgan’s head of positioning intelligence. “That said, whether we get a strong bounce or not could depend on future macro data.”
Early data from Tuesday shows that many traders are, in fact, jumping back into the markets as both stocks and cryptos are trending higher. At the time of writing, the S&P, Dow, and Nasdaq are all in the green, up 1.09%, 0.64%, and 1.01%, respectively. Bitcoin (BTC) is up 3% and trades at $56,138.
Schlegel said the macro data he is watching closely over the next couple of weeks includes the ISM manufacturing, purchasing manager’s index data, the consumer price index (CPI), and retail sales.
He suggested that the rotation out of Big Tech is “mostly done,” but said, “It’s still hard to give the ‘all clear’ to tech specifically.” The note also highlighted that defensive stocks, including utility stocks, could benefit if the market remains weak.
According to market analyst and trader Henrik Zerberg, U.S. markets for cryptocurrencies and stocks are on the cusp of a blow-off top.
“As we in the coming few months reach ATHs in US stock market and in BTC+ Crypto, the current Bearish sentiment will develop into strong Bullish sentiment and euphoria - and the markets will soar!!,” Zerberg tweeted on Monday amid the market selloff.
“I will be told that I’m wrong about my forecast of a coming top in US markets,” he added. “But #RecessionIScoming and largest Bear Market since 1929 will begin. But first #BlowOffTop (in US markets!).”
Zerberg previously tweeted that he sees a market top coming in October, and as markets started to show weakness on Sunday, he repeated this prediction, adding, “But not yet.... now the ‘Cavalry’ will step in - which will create a strong bounce and new ATHs in US markets… only it will not be enough and #RecessionIScoming.”
In response to the post from Zerberg, one user noted that “Other markets seem to have topped though,” and said, “US making new highs makes sense because money will flow back to the 'perceived' safe haven.”
“Correct,” Zerberg replied.
He also retweeted the following post from market analyst Crypto Rover which highlights that major bullish run-ups are typically proceeded by a notable flush-out.
Before a big bull market, we always see a big crash.
Will history repeat for #Bitcoin? pic.twitter.com/vz20cKDfyx— Crypto Rover (@rovercrc) August 5, 2024
Legendary trader Peter Brandt added further support to Zerberg’s claim, noting that Bitcoin’s decline since the April 2024 halving is starting to look similar to market movements ahead of the 2016 bull run.
Please note that $BTC decline since halving is now similar to that of the 2015-2017 Halving Bull market cycle pic.twitter.com/cIm3WKzBog
— Peter Brandt (@PeterLBrandt) August 5, 2024
While crypto naysayers like Peter Schiff insist that Bitcoin ETF holders are going to sell their holdings en masse following Monday’s pullback, Bloomberg Senior ETF analyst Eric Balchunas pointed out that their response was the opposite, as those with exposure to BlackRock’s iShares Bitcoin Trust (IBIT) practiced the fine art of HODLing amid the sell-off.
“So $IBIT investors woke up on Monday to a -14% move over wknd after stomaching an 8% decline the week prior and what did they do? ABSOLUTELY NOTHING. $0 flows,” he tweeted on Tuesday.
“Compared to some of these degens these boomers are like the Rock of Gibraltar,” Balchunas said. “You guys are so lucky to have them.”
As for what could help spark the next rally to a blow of top, Kyle Chassé, founder and CEO of Master Ventures, posted the following tweet highlighting that the “Money printer” is about to “go BRRRRRR” again.
BREAKING: ??STARTING TOMORROW THE US WILL START $30 BILLION PER MONTH TREASURY BUY BACKS
Money printer go BRRRRRRR!!! pic.twitter.com/1RLBZ80fMZ— Kyle Chassé (@kyle_chasse) August 6, 2024
