- Investors should consider buying Bitcoin if the S&P 500 breaks lower, according to Victor Dergunov, co-founder of Albright Investment Group.
- The cryptocurrency’s upside potential is substantial, even if it falls towards $6,500.
- Spot gold is also an attractive investment alternative against a slippery S&P 500.
Bitcoin is an attractive destination for investors looking to shield themselves from the next stock market crash, asserts Victor Dergunov.
The co-founder of Albright Investment Group, a Connecticut-based investment firm, said the cryptocurrency has adequate upside potential, even though its recept attempts to break bullish on a critical resistance level near $10,000 have failed.
BTCUSD logs a decent recovery after falling 10% from its $10K high | Source: TradingView.com, Coinbase
He noted that bitcoin might have found a bottom near $8,700, a level that capped the cryptocurrency’s downside correction from flourishing throughout May 2020. Mr. Dergunov took cues from a “constructive” bitcoin futures that were trading above $9,000.
“A break above $9K represents a momentum change in my view,” wrote Mr. Dergunov. “Next, BTC should test the $10K level and plausibly break out higher after that.”
S&P 500 Looks Bleak
The fund manager said the U.S. benchmark index has weaker upside potentials, citing its poor underlying metrics that concerns less-than-expected earnings and profits. He further lambasted the S&P 500’s 40-percent recovery from its mid-March low for having fuelled by a surplus Federal Reserve stimulus.
The U.S. central bank announced in March 2020 that it was cutting interest rates to near zero. It also accelerated a flood of bond-buying programs to stabilize the U.S. economy while bolstering the availability of credit. The Fed chair Jerome Powell noted that they would do anything to protect the market from pursuing a financial meltdown.
The government additionally intervened by approving more than $3 trillion in spending to combat the economic crisis. The net stimulus now expects to breach above $10 trillion.
S&P 400 breaks above 200-day moving average | Source: TradingView.com
Mr. Dergunov asserted that the S&P 500 would benefit for a while from the multi-trillion dollars of liquid injection. But once the Fed pulls back, the U.S. benchmark will fall.
The index last night broke above the said resistance. Old fractals show that it could now undergo a 12.7 average downside correction in over the next six months. Mixing the technical signals with Mr. Dergunov’s analysis, a bearish S&P 500 looks possible.
Bitcoin Rivals
Mr. Dergunov also recommended alternatives to Bitcoin that could behave as a hedge if the stock market slips. They included spot gold, a top Bitcoin rival, that recently logged its seven-year high above $1,700.
The precious metal is now correcting like the cryptocurrency, but Mr. Dergunov asserts that the pullback would prompt more investors to purchase the dip.
XAUUSD corrects 3 percent after topping at $1,765.30 | Source: TradingView.com, ICE
The analyst predicted the same about Bitcoin, stating that the crypto could fall to as low as $6,500, but its upside potential would remain stable.