Summary:
- The bear market in traditional markets could continue to go deeper and longer.
- Veteran analyst, Timothy Peterson, believes the S&P500 could drop another 30%.
- The dip could happen within the next 6 to 12 months.
- The S&P500 could end up bottoming at $2,700.
Yesterday, September 21st, US Federal Chairman Jerome Powell raised interest rates by 0.75% to reach a range of 3% to 3.25%, the highest it has been since 1980. The US Fed, through its Chairman, indicated that the rate hikes would continue till inflation is tamed and reduced to 2%.
Chairman Powell said:
My main message has not changed since Jackson Hole. The FOMC is strongly resolved to bring inflation down to 2%, and we will keep at it until the job is done.
The S&P 500 Could Drop Another 30% to $2,700
As soon as the news hit that the US Federal Reserve was going to increase interest rates by 0.75%, global stocks took a nosedive, with the S&P500 dropping by 2.8% from comfortable levels around $3,900 to close the day at $3,789.
However, the bear market could result in the S&P500 dropping an additional 30% in the next six to twelve months to hit a potential bottom of $2,700. This is according to an analysis by Veteran analyst Timothy Peterson of Cane Island Alternative Advisors, who shared his forecast through the following statement and accompanying chart.
There has never been a #bearmarket this deep and this long that did not go deeper and longer. -30% from here in 6-12 months = S&P 500 @ 2700 (a number I keep coming up with via multiple methods independent of this historical analysis.)
How Low Can Bitcoin Go?
Consequently, and given Bitcoin’s correlation to both the S&P500 and the Nasdaq, a drop to $2,700 could mean that tough times ahead for the King of Crypto.
One scenario would be a drop to the 2019 peak value of around $14k. Another scenario would be a retest of the $10k psychological support. Ultimately, the worst-case scenario would be a drop to the $6k level, a considerable area of support during the 2018 bear market.
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