The relentless sell-off that affected global markets earlier this year and saw the Nasdaq 100 index plunge more than 5% as investors moved to the sidelines, according to JPMorgan Chase, saw the market get close to a tactical opportunity to buy the dip.
The global market rout saw the price of Bitcoin briefly drop below the $50,000 mark and saw the cryptocurrency market’s Fear & Greed index plunge into its lowest level in two years, signaling “extreme fear” among investors for the first time since July 2022.
Despite the carnage, JPMorgan Chase analysts suggested that the rotation out of the technology sector, which has been a defining market trend in recent months, may be nearing its end. Investors, burned by the rapid ascent of AI darlings like Nvidia, appear to be retreating en masse.
John Schlegel, JPMorgan’s head of positioning intelligence, write:
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. That said, whether we get a strong bounce or not could depend on future macro data.”
The market plunge came over a confluence of various factors, including investors concerns surrounding economic growth and the potential overvaluation of artificial intelligence.
Economic data in the United States has started pointing to a potential recession after worst-than-unexpected unemployment data triggered what’s known as the Sahm rule, an indicator that measures the three-month moving average of the U.S. unemployment rate against its previous 12-month low.
Meanwhile, rising tensions in the Middle East exacerbated investor anxiety as Iran is expected to soon attack Israel in response to the killing of Hamas’s leader Ismail Haniyeh in Tehran.
/1 Over the weekend, #Bitcoin faced a major decline driven by unfavourable macroeconomic news (JPY-USD carry trade), Middle East geopolitical tensions, and large players liquidating funds. This led to a liquidation cascade, plunging BTC to ~$48,200. pic.twitter.com/yFlTyAYTls
— CCData (@CCData_io) August 5, 2024
While tech’s reign may be waning, defensive sectors like utilities are showing signs of resilience.
In the cryptocurrency space, as CryptoGlobe reported, a seasoned cryptocurrency trader well-known in the space for accurately predicting the May 2021 market crash has recently revealed he is optimistic about Bitcoin’s performance in the last quarter of the year.
As CryptoGlobe reported, the amount of Bitcoin on exchanges has been seeing an increase in outflows “despite the fact that Bitcoin has entered into a fluctuation area since February.”
According to analysis published by on-chain analytics firm CryptoQuant, there has been a steady rise in Bitcoin outflows from exchanges in recent weeks, in a trend that is typically seen as bullish. A smaller supply of BTC exchanges means that the cryptocurrency’s price could rise if demand is maintained or grows.
Featured image via Unsplash.
