Markets feel shaky again because money is moving in force. Automated selling, low liquidity, and hedging flows are starting to matter more than fundamentals.
With U.S. stocks under pressure, the risk of stress spreading to other assets (like crypto) is growing.
Systemic selling and a liquidity-driven market
Financial giant Goldman Sachs recently warned that the U.S. equity sell-off is far from over.
Trend-following CTAs have already triggered sell signals in the S&P 500, and the firm estimated that these funds could sell up to $33 billion this week! Total selling will reach upto $80 billion over the next month, if weakness continues.
Source: X
What’s important is that this selling isn’t dependent on bad news. Even in flat or slightly higher markets, CTAs are still expected to reduce exposure.
Markets remain unsettled, making it difficult to trade without moving prices, and this season is typically weak. If volatility persists, many automated funds may continue selling, which could drag prices even lower.
Technical positioning is making the situation worse
When the S&P 500 fell below 6,900, options traders had to sell more as prices dropped to stay hedged. That’s why a small 1% move can feel much bigger.
Forced selling and low liquidity make different assets move together, so there’s a chance that the stock market stress spreads to crypto, bonds, and commodities.
Is Bitcoin closer to its bottom?
While risk markets struggle, some analysts see a different path. According to Michael van de Poppe, Bitcoin’s weekly RSI is at its lowest level since the 2018 and 2022 cycle bottoms. This zone is usually associated with capitulation.
At the same time, Bitcoin’s valuation relative to gold is at its lowest level ever. Gold appears to be stalling after a strong run, and this has so far come before BTC rotations in 2011, 2016, and 2020.
Source: X
U.S. economic data is calmer, and there are some policy updates (CLARITY ACT) coming soon. That could help close the gap between how scared markets feel and what fundamentals actually look like.
Volatility is still a risk in the short term. But, big picture? Bitcoin may be closer to the bottom than many people think.
Final Thoughts
- Forced flows are driving market moves.
- Downside risk remains for BTC, but capitulation may already be forming.
Source: https://ambcrypto.com/33b-u-s-equity-sell-off-looms-how-will-it-affect-bitcoin/
