US Stocks and Crypto Headed for Blow-Off Top, Analyst Says

Market analyst and trader Henrik Zerberg predicts a blow-off top in US markets for cryptocurrency and stock sectors. This prediction comes after the market-wide crash on Monday, which saw over $1 billion in crypto positions liquidated.

The crypto industry is recording a shift in sentiment, with Bitcoin up 8%, holding well above $55,000, and dragging altcoins along with it.

Blow Off Top To Come In Crypto and Stock Markets

Zerberg anticipates new all-time highs (ATHs) in the US stock market as well as crypto. He says the current bearish sentiment will transform into a strong bullish sentiment and euphoria, leading to a blow-off top.

“As we in the coming few months reach ATHs in the US stock market and in BTC+ Crypto, the current Bearish sentiment will develop into strong Bullish sentiment and euphoria – and the markets will soar! I will be told that I am wrong about my forecast of a coming top in US markets. But Recession is coming and the largest bear market since 1929 will begin. First, blow-off top (in US markets!),” Zerberg wrote.

In crypto jargon, a blow-off top is a trading term that describes a chart pattern showing a steep and rapid increase in Bitcoin price and trading volume. After that, a steep and rapid drop in price happens, accompanied by high volume. Analysts interpret the rapid changes to mean the market was way overbought.

Read more: 5 Best Platforms To Buy Bitcoin Mining Stocks After 2024 Halving

Zerberg’s forecast comes after panic selling on Monday turned into impulse buying. Nevertheless, Jack Mallers, a popular market analyst, ascribes the sell-off to the unique availability of open Bitcoin markets as the crisis intensified.

“In crises, markets sell what they can, not what they want. Bitcoin is down because it was the only market open to sell on Sunday night, not because the only fixed supply of money we have is now less valuable. Bitcoin isn’t hedging the broken financial system, it’s replacing it,” Mallers explained.

At the height of the crisis, liquidity was needed, and it could only come from one place on a Sunday night. Accordingly, Bitcoin’s liquidity positioned it for losses, as investors had a gateway to exit the market. This explanation highlights Bitcoin’s role in fixing the financial system.

“Liquid assets always be liquidated first in liquidity crises. Bitcoin is insanely liquid…try and sell $275k of gold at 11:27 pm on a Sunday,” Adam, a Bitcoin mining infrastructure developer, said.

As BeInCrypto reported, markets are already recovery mode after ETF (exchange-traded funds) investors reportedly seized the opportunity to buy the dip.

ETF Investors, Whales Buy The Dip After Marketwide Jitters

On Tuesday, analyst James Seyffart observed, “ETF investors, in aggregate, likely bought the dip on Ethereum today.” Indeed, data shows that ETH ETFs recorded up to $48.73 million in net inflows on Monday, effectively beating Bitcoin ETFs, which saw $168.44 million in net outflows.

Bitwise CIO Matt Hougan reported positive inflows into the firm’s ETF instruments, IBIT for Bitcoin and ETHW, acknowledging that ETF investors bought the dip.

“We had net inflows into both our Bitcoin and Ethereum ETFs today. ETF investors buying the dip,” Hougan wrote.

Read more: How to Invest in Ethereum ETFs?

Notably, Bitcoin ETFs witnessed some of the most substantial trading volumes on August 5 within minutes of the US session opening. BlackRock’s iShares ETF IBIT, in particular, surpassed $1.55 billion in trading volume in Monday’s first hour of trading. ETF analyst Eric Balchunas said this was concerning.

“Bitcoin ETFs have traded about $2.5b so far, a lot for 10:45 am, but not too crazy (full history below). If you are a Bitcoin bull you do not want to see crazy volume today, as ETF volume on bad days is a pretty reliable measure of fear. On the flip, deep liquidity on bad days is part of what traders and institutions love about ETFs. You also want to see volume too, good for the long term,” Balchunas commented.

Alongside ETF investors, whales are also scooping Bitcoin at a discount. According to a press release shared on Monday, healthcare company Semler Scientific acquired 101 BTC tokens. The company recently adopted a Bitcoin treasury, with the latest buy bringing its total holdings to 929 BTC.

The firm started buying Bitcoin in late May, acquiring 581 BTC for around $40 million. It made two more Bitcoin investments in June, effectively emulating the precedent set by Michael Saylor’s MicroStrategy. So far, the company has spent $63 million in Bitcoin purchases, steadily integrating Bitcoin into its treasury operations.