Katie Stockton, the founder of Fairlead Strategies and a well-known technical analyst, says the coming weekend could be a turning point for the US stock market. She believes that what Bitcoin does over the next couple of days will strongly influence how equities behave next week.
Right now the market is tense. Bitcoin fell below eighty one thousand dollars earlier today because investors are nervous about the macro environment. At the same time the S and P 500 dropped as Nvidia broke below its one hundred day moving average even after reporting very strong earnings and upbeat guidance.
Stockton told CNBC that Bitcoin’s twenty four seven trading often acts as an early signal for risk sentiment. Many people who hold crypto also invest in tech stocks especially AI names. So when Bitcoin weakens it usually shows investors are pulling back from riskier assets in general. That pullback then spills over into the stock market.
She said that if Bitcoin finds a bottom and rebounds toward ninety thousand dollars it would suggest that the recent sell off was more of a panic flush than the start of a long downturn. That kind of move could be positive for stocks next week.
There are other possible boosts too. Fed Governor John Williams recently said that a rate cut in December is still possible. That comment renewed hopes that borrowing costs may come down sooner than expected. Lower rates tend to support stock valuations and make investors more willing to take risks. This is especially helpful for sectors hurt by high yields like tech and growth stocks.
Seasonal factors may also help. Thanksgiving week is historically strong for US equities. Stockton pointed out that the market is already in short term oversold conditions which often come before a rebound. If Bitcoin steadies and optimism builds around the Fed a recovery in stocks becomes more likely.
But the opposite could also happen. If Bitcoin stays weak or dips further it may deepen investor caution. Stocks could remain vulnerable even though they are oversold.
Stockton summed it up clearly. If Bitcoin bottoms out it is good for equities in the short run. If it does not find support the situation worsens. That is why investors will be watching Bitcoin closely this weekend.