Coin World News Report:
Since the beginning of this year, major tech stocks such as NVIDIA and Apple have been driving the continuous rise of the US stock market with the theme of artificial intelligence (AI). The S&P 500 Index, one of the four major indices of the US stock market, has set a new historical high for 31 consecutive times.
However, Goldman Sachs Group has warned investors in a recent report that the risk of a pullback in the US stock market is gradually increasing. Now may be a good time to step on the brakes, and investors should exercise caution and adopt appropriate hedging strategies to mitigate risks.
Goldman Sachs Analysts: Three Factors Indicate Bearishness in the US Stock Market
Analysts point out that the increasing risk factors at present include:
The continuous expansion of the US deficit, which is expected to reach $1.9 trillion this year, an increase of $400 billion compared to the forecast four months ago.
Retail and institutional investors are increasing their exposure to stocks.
Compared to Q1 this year, the heat of the US stock market in Q2 was mainly driven by a few stocks. Historical data shows that as the concentration of gains increases, the risk of a pullback also rises accordingly.
The GDP growth rate of the United States is expected to slow down from 4.1% in the second half of 2023 to 1.7% in the first half of 2024, while the unemployment rate is projected to rise from 3.5% to 3.8% based on a three-month moving average. Goldman Sachs points out that due to the decline in real income growth and softening consumer sentiment, the economy is expected to continue its weak growth.
Given the current low cost of hedging, investors can provide hedging strategies for their investments through tools such as put options while retaining high-quality holdings.
As the global election cycle unfolds, market volatility may gradually increase. Currently, the 10-day volatility of the S&P 500 Index is only 5%, which is at an extremely low level.
Will Bitcoin be dragged down by the US stock market?
Since June, the correlation between Bitcoin and the US stock market has reached the highest level in 18 months. In early June, the 30-day correlation coefficient between Bitcoin and the Nasdaq increased to 0.64 for the first time since 2022.
Therefore, if the US stock market does experience a significant pullback as experts say, it may trigger a continuous sell-off of Bitcoin. Investors should be cautious and enter with care.