As a stock trader, you should focus your attention on cryptocurrencies at the moment: the Bitcoin gives investors an insight into the direction in which the stock market could move. Investor legend Mark Mobius said this in a Bloomberg interview.
“Cryptocurrencies are a good indicator of how investors feel,” he said. “As soon as the Bitcoin price drops, the Dow Jones price will also go down the next day. This is what the pattern looks like. This shows that Bitcoin is a leading indicator.”
Mobius was co-founder of Mobius Capital Partners and has gained a lot of experience in emerging markets with his three decades at Franklin Templeton Investments.
Time of the “crypto winter”
Mobius’ statements come at a time when the cryptocurrency market is in a so-called “crypto winter”. The estimate for the broader crypto market has now fallen to under a trillion dollars. This, after having reached an all-time high of over 3 trillion dollars in November. At the moment, the Bitcoin price stands at 20,540 dollars. This means that he has lost more than 70 percent of his record height from last November. At that time, the value was still $ 69,000.
According to Mobius, the mood on the stock market would reach its lowest point when both institutional and private investors stop putting even more money into the market due to heavy losses. “Only then has the time come to start buying shares again.”
Low point not reached yet
American stock markets have often turned to “bear markets” after the US Federal Reserve raised interest rates. This was to counteract the high inflation-related prices somewhat. Now that the Nasdaq has lost nearly 30 percent and the S&P 500 more than 20 percent of its value, market watchers are looking for signs of when the sell-off in the trading business could come to an end.
As long as Bitcoin investors continue to talk about applying the “buy-the-dip” principle, according to Mobius, this would indicate that there is still hope. “However, this also means that we have not yet reached the bottom of a bear market.”