Bitcoin is an attractive destination for investors looking to shield themselves from the next stock market crash, asserts Victor Dergunov.
The co-founder of Albright Investment Group, a Connecticut-based investment firm, said the cryptocurrency has adequate upside potential, even though its recept attempts to break bullish on a critical resistance level near $10,000 have failed.
BTCUSD logs a decent recovery after falling 10% from its $10K high | Source: TradingView.com, Coinbase
He noted that bitcoin might have found a bottom near $8,700, a level that capped the cryptocurrency’s downside correction from flourishing throughout May 2020. Mr. Dergunov took cues from a “constructive” bitcoin futures that were trading above $9,000.
“A break above $9K represents a momentum change in my view,” wrote Mr. Dergunov. “Next, BTC should test the $10K level and plausibly break out higher after that.”
S&P 500 Looks Bleak
Mr. Dergunov’s positive comments on Bitcoin surfaced in the wake of a bleaker S&P 500.
The fund manager said the U.S. benchmark index has weaker upside potentials, citing its poor underlying metrics that concerns less-than-expected earnings and profits. He further lambasted the S&P 500’s 40-percent recovery from its mid-March low for having fuelled by a surplus Federal Reserve stimulus.
The U.S. central bank announced in March 2020 that it was cutting interest rates to near zero. It also accelerated a flood of bond-buying programs to stabilize the U.S. economy while bolstering the availability of credit. The Fed chair Jerome Powell noted that they would do anything to protect the market from pursuing a financial meltdown.
The government additionally intervened by approving more than $3 trillion in spending to combat the economic crisis. The net stimulus now expects to breach above $10 trillion.
S&P 400 breaks above 200-day moving average | Source: TradingView.com
Mr. Dergunov asserted that the S&P 500 would benefit for a while from the multi-trillion dollars of liquid injection. But once the Fed pulls back, the U.S. benchmark will fall.
The prediction converged with a technical overview provided by Jason Goepfert, an analyst at Sundial Capital Research. He noted earlier this week that there is about 72 percent chance the S&P 500 breaks lower if it trades near its 200-day moving average wave.
The index last night broke above the said resistance. Old fractals show that it could now undergo a 12.7 average downside correction in over the next six months. Mixing the technical signals with Mr. Dergunov’s analysis, a bearish S&P 500 looks possible.
Bitcoin Rivals
Mr. Dergunov also recommended alternatives to Bitcoin that could behave as a hedge if the stock market slips. They included spot gold, a top Bitcoin rival, that recently logged its seven-year high above $1,700.
The precious metal is now correcting like the cryptocurrency, but Mr. Dergunov asserts that the pullback would prompt more investors to purchase the dip.
XAUUSD corrects 3 percent after topping at $1,765.30 | Source: TradingView.com, ICE
The analyst predicted the same about Bitcoin, stating that the crypto could fall to as low as $6,500, but its upside potential would remain stable.
