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Cryptopolitan 2024-12-21 18:11:18

Overheated stocks and crypto pull back as volatility surge threatens bull market

Wall Street has been anything but calm this week. Stocks took a beating, crypto markets stumbled, and volatility came back swinging like it owned the place. The S&P 500 plunged 3% midweek after the Federal Reserve dropped a mixed bag of updates, leaving traders scrambling to figure out what comes next. Friday’s 1.1% rally offered a little relief, but it didn’t even scratch the surface of the damage. Bitcoin managed to recover from its slump to $95,000 as is now sitting around $97,000. Austan Goolsbee, the Chicago Federal Reserve President, tried to calm things down during an interview. He mentioned that inflation trends look good, and there’s still room for interest rates to drop. But soothing words don’t pay the bills. Investors are staring at higher bond yields and a market that feels more fragile than ever. Crypto and stocks hit hard as reality sets in The month started with a bang. Markets were hyped on seasonal tailwinds, a softer Fed outlook, and optimism for a booming economy. Everyone was feeling good about speculative plays. Crypto markets were on fire, tech stocks were soaring, and low-quality, high-risk assets were climbing like nobody’s business. But that party didn’t last. Take MicroStrategy, for instance. The company, a favorite among Bitcoin maxis, has tanked by over 30% this month. Other speculative plays followed suit. Strategists had lined up their 2025 predictions like everything was going to be sunshine and rainbows. Turns out, those predictions don’t mean much when Treasury yields are climbing, and the economic-surprise index is heading south. Fed policy confusion rattles nerves Fed chair Jerome Powell’s comments about entering a “new phase” of policy basically translated to, “We’re not sure what’s next, but we’ll let you know.” That uncertainty isn’t exactly what traders wanted to hear. This week’s selloff brought back flashbacks of December 2018 when the Fed’s hawkish tone sent markets spiraling. Back then, it was tariffs and aggressive rate hikes causing the chaos. This time, the issues are different but just as unsettling. The Fed hinted it might be getting closer to a neutral policy rate, but no one can agree on what that even means. Despite all the noise, the U.S. economy is still holding its own. GDP growth is above its long-term trend, and 2025 corporate profit projections are steady. Credit markets are fine, and the broader bull trend hasn’t collapsed. Yet. Negative market breadth is becoming a serious problem. Economically sensitive sectors are struggling, and analysts are saying there’s only a short window for things to improve before the market for stocks starts sending uglier signals. The housing market isn’t looking much better. With yields staying high, it’s stuck in limbo. There’s no momentum, and things won’t change unless rates drop significantly. Some analysts argue that this bull market still has room to run. Historically, post-1945 bull markets last over five years on average. But that stat is misleading. The long runs from 1987 to 2000 and 2009 to 2020 skew the data. Both of those bull markets saw sharp corrections in stocks that nearly ended the party early. A Step-By-Step System To Launching Your Web3 Career and Landing High-Paying Crypto Jobs in 90 Days.

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