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Market strategist: Stocks have confirmed a breakdown, Bitcoin to trade at $18k

Market strategist: Stocks have confirmed a breakdown, Bitcoin to trade at $18k
Justinas
Baltrusaitis
10 months ago
3 mins read

Gareth Soloway, the chief market strategist at ​​stock technical guidance platform InTheMoneyStocks.com, has said the recent stock market correction confirms a general breakdown. 

Speaking to Kitco News, Soloway indicated that the stock’s inability to sustain rallies between Tuesday and Thursday points to a possible further downside in the coming days. 

According to Soloway, despite the market making short-term positive gains, it has struggled to sustain the momentum highlighting a change in character. He acknowledges that typically, the market is used to experiencing minor corrections and immediately register gains, but this might not be the case. 

“So this is the first time where we have a confirmed breakdown of the wedge pattern, and it has the possibility to lead us to further downside,” said Soloway. 

The strategist adds that the drop was inevitable since technicals hinted at a significant occurrence within the stock market. 

However, he notes that small investors still have a crucial role to play in the market resurgence. If small investors pump more money into the market, Soloway projects a rally will occur. However, with volatility, the market can potentially experience increased outflows. 

He suggests that over the past month, institutional investors have instigated most market sell-off. 

Soloway said that historically, markets are known to correct after a major bull run, and it might be the case with the current trend. Notably, after plunging to lows in the first quarter of 2020, the stock market has been on a bull run, hitting several historical highs. 

Notably, the stock market is facing uncertainty ranging from factors like the spike in Covid-19 cases, concerns about rising inflation pressures and how the Federal Reserve will respond to it. 

‘Bitcoin to plunge to $18,000’

On cryptocurrencies, Soloway believes that despite sustaining a short-term rally, Bitcoin will potentially trade around the $18,000 and $20,000 mark based on historical price movements.

He notes that Bitcoin is currently replicating the major rallies of 2013 and 2017. At the same time, Soloway notes that Bitcoin still has an upside target of about $50,000 – $52,000.

Soloway added that there is a possibility the downside and upside movement in Bitcoin price will accelerate and the number of market participants will impact the price.

“Then the question you have to ask is, is that because you have a lot more participants in the market now versus 2013, 2017, a lot more institutions maybe that were buying the dip or people that were buying the dip. Maybe it has something to do with all the liquidity and dollars that the fed has been flooding into the market,” said Soloway.

After sustaining a major rally in the first of the year, Bitcoin’s value plunged by almost 50% from the $64,800 all-time high set in April. By press time, the asset was trading at $47,200.

Watch the full interview: Stocks finally ‘confirmed’ a breakdown, now comes ‘lower lows’; Gareth Soloway on Bitcoin, gold

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Justinas Baltrusaitis
Author

Justin crafts insightful data-driven stories on finance, banking, and digital assets. His reports were cited by many influential outlets globally like Forbes, Financial Times, CNBC, Bloomberg, Business Insider, Nasdaq.com, Investing.com, Reuters, among others.

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