Stocks Could Fall Another 20%. And BTC?
JP Morgan CEO Jamie Dimon predicts another easy 20% fall for S&P 500 from current levels, considering global macroeconomics. How will Bitcoin react?
In an interview with CNBC, Jamie Dimon said that the US and the world is likely to be pushed into a recession six to nine months from now. He predicted S&P 500 could fall “another easy 20%” from current levels. He added, “the next 20% would be much more painful than the first.”
How accurate were previous predictions by Dimon?
The community believes that Jamie Dimon is known to predict Fear, Uncertainty and Doubt (FUD). He is wrong in most of the predictions. Earlier in April 2020, he predicted a bad recession in his annual letter to shareholders. They stopped the buyback of JP Morgan shares. The stock then rallied 52% from April 2020 to April 2021.
In his April 2021’s annual letter to shareholders, he said that “the pandemic will end with a US economy rebound, the US economy will likely boom,” he added, “This boom could easily run into 2023.” The reverse happened. The current economy is in a worse state than in April 2021.
The markets will get the answer in 6 to 9 months whether the index will fall by another 20%.
What does the chart say?
Is there any similarity between the 2008 chart of the S&P 500 and the 2022 chart? In 2008, when the index was down by almost 10% from its all-time highs, it retested 200-day Simple Moving Average (SMA). There was a head-and-shoulder type formation, and the index breached the neckline in June 2008.
After that, the market saw a steep drop of nearly 50% before hitting bottom.
In 2022 as well, when the S&P 500 retested 200-day SMA, it was down approximately 10-12% from its all-time highs. The index formed a similar head-and-shoulder type pattern after getting a rejection from 200-day SMA. The neckline was breached in September 2022. Is the market on the verge of a steep move downside?
The impact on BTC
If Dimon’s prediction of another 20% downfall turns out to be accurate, the community fears there will be an impact on cryptos. There is a high correlation between S&P 500 and BTC. The effect multiplies when it comes to Bitcoin. From February to March 2020, when S&P fell by 35%, Bitcoin’s price fell to more than 60%. Presently S&P is down nearly 25% from its ATHs, and Bitcoin is down more than 70%
If S&P 500 falls by 20%, Bitcoin can see more than a 50% downside from the current levels. Some traders feel that this could be a buying opportunity.
Is the JP Morgan CEO on the money this time?
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