Bitcoin rally is a ‘signal’ of stock market anxiety… “Similar to the 2021 bubble”
(Seoul = Yonhap Infomax) Reporter Siyoon Yoon = As the price of Bitcoin continues to rally towards $100,000, signs of anxiety are appearing in the stock market reminiscent of the moment before the collapse of the ‘bubble’ in 2021.
On the 23rd (local time), Scott Kroner, Citigroup’s U.S. stock strategist, pointed out that Citi’s “Lefkovich Index,” which measures U.S. market sentiment, has risen sharply over the past few weeks and has entered the “euphoria” zone. .
The Lefkovic index is currently well below its 2021 high, but if market optimism becomes excessive, it could be interpreted as a signal of market overheating.
This is why there continues to be concern that a bubble burst is imminent as investors’ preference for risky assets such as Bitcoin and stocks approaches the level of the bubble last seen in 2021.
“I’m worried that we’re going to have another unsustainable market frenzy and people are going to get hurt,” said George Cipolloni, portfolio manager at Penn Mutual Asset Management. “The point is that there is this,” he said.
According to Yonhap Infomax (screen number 2520), the price of Bitcoin is currently trading at the $96,000 level and has risen to $99,850 on the 22nd, approaching the $100,000 mark.
In the New York stock market, the S&P 500 index also rose to more than 22 times next year’s profit for the first time since 2021.
Looking back at 2021, bond interest rates were at their lowest and the stock market was overheating as the U.S. federal government poured money into the economy through economic stimulus measures. Ultimately, it became the foundation for a harsh bear market the following year, and novice investors suffered huge losses.
According to Yonhap Infomax (screen number 6531), the interest rate on US 10-year Treasury bonds is trading at 4.40%. In December 2021, it was 1.50%. Bond interest rates move in inverse proportion to prices.
Mohannad Amar, portfolio manager at Beam Capital Management, said, “Rather today, higher bond yields increase the risk to the market. The Fed is easing, but interest rates continue to rise, so this is a real puzzle.”
“Instead of being pressured by rising borrowing costs, both stocks and Bitcoin continue to rise, riding the heat of ‘Trump trading,’” Ama added.
The problem is that the prices of the two assets have risen too high, and if future corporate performance does not meet investors’ expectations or if President-elect Donald Trump’s pledge to ‘strategic reserve Bitcoin’ is not realized, the prices may undergo a major adjustment.
In the U.S. stock market, the three major indices, including the S&P 500 Index, Nasdaq Composite Index, and Dow Jones Industrial Average, succeeded in rising for two consecutive trading days, with the Dow rising 1.99%, S&P 500 1.62%, and Nasdaq 1.53% on a weekly basis.
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syyoon@yna.co.kr
How can investors differentiate between a healthy bull market and the warning signs of a potential cryptocurrency bubble? [[1](https://www.wired.com/story/bitcoin-value-price-surge/)]
## World-Today-News Exclusive Interview:
**Bitcoin’s Surge: Bubble 2.0 or a New Paradigm?**
We are joined today by two esteemed guests to dissect the recent surge in Bitcoin prices and its potential implications for the stock market.
**Our guests are:**
* **Mr. David Miller:** Senior Analyst at a leading financial institution specializing in cryptocurrency trends.
* **Ms. Sarah Jones:** Chief Investment Strategist at a prominent asset management firm.
**Welcome both of you. We look forward to your insights.**
**I. The Market Sentiment: Euphoria or Healthy Optimism?**
* **Mr. Miller:** The article mentions Citigroup’s “Lefkovich Index” signaling heightened market euphoria. Do you agree with this assessment? What factors are driving this increase in optimism? Is it truly unfounded, or are there legitimate reasons for investor confidence?
* **Ms. Jones:** The article draws parallels between the current market sentiment and the 2021 bubble. Do you see these comparisons as valid? How can we distinguish between a healthy bull market and the warning signs of a potential bubble?
**II. Bitcoin vs. Stocks: Diverging Paths or Intertwined Fates?**
* **Ms. Jones:** The article highlights the simultaneous rise in Bitcoin and the S&P 500 despite rising bond yields. What does this tell us about the current market dynamics? Are these assets becoming increasingly correlated or are there fundamental differences driving their performance?
* **Mr. Miller:** Some experts suggest Bitcoin is benefiting from the “Trump trading” phenomenon. What do you make of this theory? Is this a sustainable trend, or are there risks associated with tying Bitcoin’s fate to political events?
**III. The “Trump Trading” Phenomenon: Friend or Foe?**
* **Mr. Miller:** The article mentions the potential for a disappointment if President-elect Trump’s Bitcoin policies don’t materialize as expected. How significant of a factor could this be in shaping Bitcoin’s future trajectory?
* **Ms. Jones:** How much influence do you think political events and rhetoric truly have on financial markets? Is there a risk of overreacting to news cycles and losing sight of long-term investment goals?
**IV. The Future Outlook: Bubble Burst or Continued Growth?**
* **Ms. Jones:** If history repeats itself, what lessons can be learned from the 2021 market downturn? What steps can investors take to mitigate risk and navigate potential volatility in the weeks and months ahead?
* **Mr. Miller:** What are your long-term predictions for Bitcoin and the stock market? Do you foresee further growth, a period of correction, or a more dramatic market shift?
**
Thank you both for sharing your valuable insights with our audience. We encourage our viewers to engage in further discussion and research to make informed investment decisions.
