The financial market of 2024 feels like it’s having an identity crisis. Structured and disciplined on one side, chaotic and high on adrenaline on the other.
On one hand, we’ve got benchmark stock indexes like the S&P 500 and the Dow, climbing steadily and showing off their quiet strength. On the other, Bitcoin is on a rampage, throwing caution to the wind and pushing closer to $100,000.
The S&P 500 has been all business lately. After the post-election buzz took it to a 25% gain for the year, the index cooled off just enough to test its October highs. Last week, it bounced back with a 1.7% rise.
Most stocks have been pulling their weight, and financials and cyclical sectors are leading the charge. The optimism is tied to what’s coming next: a Trump administration that’s expected to pump out policies aimed at expanding the economy and boosting earnings growth.
Bitcoin though? It’s on a whole different wavelength. The apex crypto is up 40% this month alone, and it’s not showing signs of slowing down. Traders are betting big, fueled by aggressive headlines and the belief that Bitcoin is about to go mainstream with new government support.
It’s feeding on the kind of fervor that turns Thanksgiving dinners into full-blown money talk. But there’s no ignoring the risks—Bitcoin is overbought, its chart is overheating, and the race to $100,000 feels more like a sprint than a marathon. But that’s just how we roll, isn’t it?
Bitcoin takes the wheel
Bitcoin is a party starter, and its mania has spilled over into crypto-linked stocks, penny stocks, leveraged ETFs, and even speculative tech plays that were left for dead after the 2021 bust.
Take MicroStrategy for example. The company has turned itself into a Bitcoin holding tank, using billions of dollars raised through stock sales and debt to buy more Bitcoin. It’s a self-reinforcing cycle: more Bitcoin means more enthusiasm and more enthusiasm means retail traders piling in.
Last week, retail buying tripled just as MicroStrategy’s stock hit a $100 billion market cap — three times the value of its Bitcoin stash.
If MicroStrategy’s wild ride isn’t enough, there are leveraged ETFs that take things to the next level. MSTU, an ETF tied solely to MicroStrategy shares, has seen its trading volume double this month. But things are getting dicey.
Reports say that fund sponsors are scrambling to replicate promised returns because brokers are capping their exposure. It’s a high-stakes game, and the cracks are starting to show.
cross the market, leveraged-long ETFs are seeing near-record inflows compared to short ETFs. According to SentimenTrader, the last time this happened was in late 2021—right before a major market peak.
Net inflows to stock ETFs are also hitting multi-year highs, though they’re not as extreme relative to market value as they were back then. Still, it’s clear that money is pouring into high-risk plays, and the appetite for speculation is alive and well.
S&P 500: Slow and steady
Amid the chaos, the S&P 500 is staying cool. Earnings are climbing, GDP growth is holding above 2%, and the Federal Reserve is trimming rates at a measured pace. Credit spreads are tame, and seasonal trends are providing an extra boost.
Wall Street strategists are bullish, revising their 2025 targets upward. Some are projecting an 11% gain for the S&P 500, pushing it to 6,600.
It’s not an outlandish prediction, but it’s worth noting that these targets are coming off relatively low levels. Investor sentiment is getting frothy but hasn’t reached dangerous extremes. That doesn’t mean everything’s fine, though.
The speculative frenzy surrounding Bitcoin and crypto-linked assets is a stark contrast to the measured advance of the S&P 500. It’s a reminder that the market is split, with one foot in reality and the other in fantasy.
But here’s the thing: the line between these two worlds isn’t as clear as it seems. Bitcoin’s rise is pulling energy from other high-flyers like Nvidia, which has been trading flat despite strong earnings and guidance. Nvidia has added $2.3 trillion in market value this year alone, but the Bitcoin frenzy might be stealing its thunder.
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