Fears of a global pandemic as the coronavirus continues to spread have ignited a historic stock market sell-off. Investors are dumping shares at a rate not seen in over a decade as anxiety over the containment of the virus grows.
With the Dow Jones Industrial Average posting its biggest weekly decline since the global financial crisis of 2008, Tom Lee, co-founder of Fundstrat Research and avid crypto supporter, is seeing a similarity between stocks and the highly volatile world of cryptocurrencies.
Responding via Twitter to a researcher who notes that the S&P 500 wiped out almost five months of gains in a matter of days, Lee says,
“Stocks are starting to look like crypto charts. Maybe the whales are playing a different game.”
After a string of 1,000-plus-point single-day declines, the Dow shed another 357 points into Friday’s close. It capped a week of epic losses that marked a 10% drop, wiping an estimated $3.18 trillion in market value from US stocks. During the same period, Bitcoin shed 11% from its market cap.
Despite market pressures, Lee remains optimistic.
“‘This market is not normal’ but it also doesn’t mean we keep falling.”
Lee says that the degree of investor panic over the coronavirus is unwarranted, reports MarketWatch.
“Because of the idiosyncratic nature of a potential pandemic, it is really difficult to know when it is priced in.”
The analyst also forecasts that the stock market could bottom out and ignite a V-shaped reversal that would signal a sharp rally after the severe correction.
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