A market expert is predicting a major upcoming downturn, complicating matters for various sectors already weighed down by bearish sentiment.
According to Gareth Soloway, Chief Market Strategist at trading education platform Verified Investing, investors should anticipate a “significant downside” for stocks and cryptocurrencies in the near term, he said during an interview with David Lin, published on February 26.
To support his projection, Soloway cited troubling technical indicators and macroeconomic factors that signal a shift from the bullish trends of late 2024 to a more bearish outlook.
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For instance, he highlighted the breakdown of key trend lines in major indices like the NASDAQ 100 and the S&P 500 as evidence of a major trend change.
Soloway stated that the market confirmed its direction by breaking the lower trend line. December 16 marked a shift from upward momentum to consolidation and a potential decline.
“The market has now decided which direction by breaking this lower trend line. <…> You are looking at a failed breakout or potential breakout leading to significant downside in the markets,” he said.
For the NASDAQ, Soloway noted a double-top pattern followed by a drop below critical support levels dating back to August 2024.
He predicted that while short-term bounces may occur, driven by oversold conditions in stocks like Palantir (NASDAQ: PLTR) the broader trajectory remains downward.
Indeed, as reported by Finbold, the stock market recently hit its most overvalued phase in history. If past trends are anything to go by, investors should expect a possible crash, a sentiment echoed by other market figures such as economist Henrik Zeberg and author Robert Kiyosaki.
Bitcoin’s ‘bigger bear market’
On the other hand, he stressed that the cryptocurrency market, particularly Bitcoin (BTC), is not immune to this bearish sentiment. The technical analyst, who correctly anticipated a top at $108,000 in December, now sees Bitcoin heading toward $73,000 to $75,000, which he views as major technical support.
He attributed the decline to Bitcoin’s correlation with risk-off sentiment in equities. Despite his long-term optimism about Bitcoin as “digital gold,” he warned of a potential repeat of past corrections, or worse, a deeper bear market.
“For those of us who are in Bitcoin, it’s starting to do a bigger bear market to the downside, which could be much nastier. Now we don’t know which one it is right here, which is this down move before this next big move up or a much bigger bear market,” Soloway stated.
Notably, Bitcoin entered bear market territory after plunging below the $90,000 mark, wiping out gains made from the optimism of the Donald Trump election. As of press time, the leading digital currency was valued at $88,344, plunging over 10% in the past week.
Drivers of market downturn
The broader market downturn is driven by what Soloway described as weakening economic data, including disappointing consumer sentiment numbers from the University of Michigan and Walmart’s recent guidance, which hinted at a slowing consumer base.
“The consumer is the backbone of the U.S. economy, and if that player is slowing, this economy’s in some trouble,” he warned.
Additional pressures, such as persistent inflation, looming tariffs, and government spending cuts under the Trump administration, could worsen the situation, potentially leading to stagflation.
While Soloway expects short-term bounces in oversold markets, he remains cautious. He advised investors to turn to defensive stocks, which offer stability and dividends amid the turmoil.
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