The U.S. stock market is on fire as it continues its v-shaped recovery after the Japanese yen carry trade crash. Nearly back at all-time highs, the current surge is likely to persist. At the same time, the crypto market is just embarking on its own recovery. Which horse will be fastest?
S&P 500 wiping out losses fast
Source: TradingView
The above weekly chart shows the S&P 500 (SPX). A deep correction, the scale of which hasn’t been seen since the July to October dip of 2023, is fast being wiped out. The price plunged all the way down to the 0.786 fibonacci, and has since been recovering furiously. The stochastic RSI at the bottom of the chart is signalling more upside momentum to come.
Nasdaq Composite Index upside target of $26,000
Source: TradingView
The Nasdaq Composite Index (IXIC) is a similar story. This index for tech stocks looks set to hit $20,000 at the 1.618 fibonacci extension level. A further target is overhead at $26,000.
Crypto recovery outperforming U.S. stock market
Source: TradingView
When looking at the same weekly time frame for the Total Market Cap for crypto, it can be seen that crypto has experienced a huge correction in comparison to the U.S. stock market. A 38% reversal, equating to a $1.03 trillion loss in value, is more than double that seen in U.S. stocks.
That said, the 23.5% surge that the total crypto market has just seen, outperforms the 13.7% experienced by the Nasdaq Composite Index, and the 9.5% seen by the S&P 500.
Is crypto about to more than double its market cap to $4.4 trillion?
The Total Market Cap for crypto is likely to continue to outperform the U.S. stock market, given that the price is inside of a bull flag, and the slingshot effect of powering through the top of this, has the potential to send the Total Market Cap of crypto to $4.4 trillion, based on the 1.618 fibonacci extension level - more than double its current market cap.
Therefore, it appears that crypto could be the fastest horse by far. That said, one does have to bear in mind that one of several potential black swans could change things. This would likely affect all cryptocurrencies, with the possible exception of Bitcoin, which could be regarded as an option on a very uncertain financial future.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
