US stocks could tumble 15% in a rough fall – and the bitcoin bubble could deflate further this year, Guggenheim’s Scott Minerd says

Scott Minerd
Guggenheim Investments Global Chief Investment Officer Scott Minerd.

US equities could drop 15% by the end of October, driven lower by concern over the delta variant of COVID-19 and its impact on global growth, while cryptocurrencies could continue to face pressure, according to Guggenheim’s Scott Minerd.

The chief investment officer told Bloomberg on Wednesday that September and October are likely to be “very rough” months for stocks.

“Maybe a pullback of 15% or slightly more,” he said, adding that investors could get back into buying by the end of autumn.

Stock prices and bond yields recently fell sharply as growth fears sparked by the fast-spreading delta variant dented some of the market optimism. The Dow Jones slumped 2.1% at the start of the week in its biggest one-day drop since October, but stocks have slowly been clawing back gains.

That said, the benchmark US stock indices have all hit record highs this month and are not trading far below those levels. The S&P 500 hit a record 4,393.68 on July 14 and closed about 1% below that level on Tuesday.

Wall Street can expect a rise in volatility over the next few months, as the Federal Reserve could taper its asset purchases sooner than expected if pressure grows for the central bank to start to normalize interest rates, according to Minerd. He expects Treasury yields to decline by as much as 60 basis points if markets believe the economy will weaken. A drop of that size would take the 10-year Treasury note yield to its lowest since October.

For cryptocurrencies, July was the third consecutive month of negative returns. Minerd expects them to stay challenged in the near-term.

Minerd reiterated a $15,000 price prediction for bitcoin, a 53% decline from Thursday’s price of $32,190, and said “a lot of this stuff is just junk.” Still, he called ether a more viable currency than bitcoin.

“I think there’s still more air to come out,” he said. “The standard bear market for bitcoin has been an 80% retracement, and given all the uncertainty and the new competition from new coins, I think there’s more downside to go.”

Buying bitcoin anytime soon isn’t a good idea, according to him. He has previously compared cryptocurrencies to the 17th century tulip bubble. After pulling back significantly, Minerd has said he expects bitcoin to eventually rise to as much as $600,000 per coin.

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Anthony Scaramucci’s SkyBridge hedge fund just invested $25 million in a bitcoin fund as it sees an ‘avalanche of institutional investors’ buying crypto in 2021

Anthony Scaramucci
  • Anthony Scaramucci’s SkyBridge Capital just launched a bitcoin fund and invested $25 million of capital. It will go live to outside investors in 2021.
  • After bitcoin’s 200% rally this year, investors may be hesitant to buy bitcoin at current levels. But Scaramucci told CNBC the coin is in its “early innings,” and he wants to get in before the price soars even higher. 
  • “We could be at the precursor of an avalanche of institutional investors heading in,” Scaramucci said on Tuesday.
  • Visit Business Insider’s homepage for more stories.

The latest institutional investor to dive into bitcoin is SkyBridge capital, Anthony Scaramucci’s hedge fund. The $9.3 billion firm filed an SEC form D on Monday to launch the “SkyBridge Bitcoin Fund L.P.”

Scaramucci told CNBC that the fund started trading on Tuesday with $25 million of SkyBridge’s funding, and will go live to outside investors who can invest a minimum of $50,000 on January 4.

After bitcoin’s 200% rally this year, investors may be hesitant to buy the cryptocurrency right now in fear that a post-rally pullback is on the way. But Scaramucci said bitcoin is in its “early innings,” and he wants to get in before the price soars even higher.

“We could be at the precursor of an avalanche of institutional investors heading in,” Scaramucci said in a Tuesday CNBC interview. He added there may be a large swath of investors buying bitcoin in the first quarter of 2021 because they didn’t want to put it on their balance sheets in 2020.

Read more: The CIO of a new crypto fund that has returned 220% to investors this year explains why bitcoin topped $20,000 for the first time ever this week – and shares another digital currency set to become the ‘asset of the year’ in 2021

The SkyBridge Capital founder also said bitcoin will be a “very strong asset class” over the next decade given the monetary supply and current central banking coordination. 

SkyBridge joins a growing group of institutional players that are acknowledging bitcoin’s legitimacy as a store of value. Last month, Guggenheim filed to reserve the right for 10% of its $5.3 billion Macro Opportunities Fund to invest in the Grayscale Bitcoin Trust.

Other firms like MassMutual have invested in the cryptocurrency as well. Meanwhile, billionaire investors such as Stanley Druckenmiller and Paul Tudor Jones have  publicly discussed their bitcoin purchases.

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