In an interview with Bloomberg, macro strategist Mark Cudmore assessed the latest developments in the crypto market and their potential impact on the stock market.
Cudmore said the situation, especially for companies holding digital assets, remains a concern for the market.
Cudmore said the “pain” in the crypto market is not over yet, highlighting the dynamics created by companies like MicroStrategy that hold large amounts of Bitcoin on their balance sheets. MicroStrategy’s announcement that it has reserves to cover dividend payments over the next 14 months was a relief to the market, but Cudmore remains cautious about the overall picture.
The analyst said companies focused on digital assets and their ETFs are creating a “multiplier” effect that amplifies market movements in both directions. He warned that if stock prices fall below the value of their crypto assets, these companies could be forced to sell their holdings, creating a “death spiral.”
Cudmore said the expected year-end rally could be hampered by the possibility of a “hawkish interest rate cut” by the Fed next week and a decline in the crypto sector, which could negatively impact retail investors.
*This is not investment advice.
