Analysis of Stock Price Fluctuations: Why Are Gold, Bitcoin, and U.S. Stocks Moving Down Simultaneously

Market sentiment has suddenly shifted, and gold, US stocks, and crypto have recently experienced a “collective decline.” This wave of adjustment involves a synchronized drop across multiple asset classes, reflecting a subtle yet profound change in investor confidence. The Dow Jones Industrial Average fell over 1%, gold prices approached the $4,000 support level, and Bitcoin and Ethereum both declined more than 2%. By November 18, the downward trend showed no signs of easing, with gold falling for the fourth consecutive day, down 0.4%, and Bitcoin plunging to $91,107, hitting a nearly 7-month low.

Reasons for Stock Fluctuations: Fed Expectations and AI Bubble Double Hit

The decline across multiple assets is mainly driven by the combined influence of two forces. First, the Fed’s hawkish stance has become increasingly evident, with market expectations for a 25 bps rate cut in December sharply lowered to 43%. Officials’ repeated hawkish signals have shattered the previously widespread optimism about rate cuts, which is a heavy blow to risk assets supported by low interest rates.

Second, concerns over overvaluation in Tech Stocks are growing. Investors are beginning to question whether the business models of tech giants relying on massive financing to support large capital expenditures are sustainable. Recent bond issuance by Amazon has cooled, reflecting market caution and skepticism toward this model. The once-hot AI concept investments are cooling down, and the attractiveness of high-valuation tech stocks has noticeably diminished.

Technical Warning Signs: Multiple Key Indicators Point to Downtrend

From a technical perspective, current market signals are concerning. The S&P 500, Dow Jones, and Nasdaq all have broken below their 50-day moving averages, typically indicating a potential shift from an uptrend to a downtrend. On Bitcoin’s technical chart, the 50-day moving average has crossed below the 200-day moving average, forming a “death cross” with significant warning implications.

John Roque, Head of Technical Analysis at 22V Research, pointed out that the Nasdaq’s decline could further accelerate, with a potential drop of up to 8%. This suggests that if the stock market continues to face pressure, the Nasdaq, heavily concentrated in Tech Stocks, could face greater downside risk.

Market Outlook: Bull-Bear Debate and Risk Warnings

Opinions on future stock movements vary. Jeff Mei, COO of BTSE, believes that with AI valuations being questioned and unclear prospects for rate cuts, Bitcoin faces further downward pressure. Quaglini, an analyst at Hex Trust, states that if the stock market continues to decline, Bitcoin is very likely to retest the $70,000 support level.

Regarding gold, analysts suggest that investors might sell gold holdings to offset losses in stocks, seeking urgent liquidity. Michael Armbruster, Co-Founder of futures broker Altavest, notes that in the short term, gold will fluctuate in tandem with other risk assets, and as investors seek cash flow, gold’s volatility could further increase.

Portfolio Adjustment Recommendations

Jeffrey Gundlach, Chief Investment Officer of DoubleLine Capital, issued a warning that many asset prices are now at extremely overvalued levels. He recommends that investors convert about 20% of their portfolios into cash to create a buffer against potential sharp market corrections. This advice reflects the prevailing concerns in the market.

Overall, the reasons behind stock fluctuations are complex, involving macro policy shifts and micro valuation issues. Investors should be alert to negative technical signals and leave sufficient room to respond to potential risks.