US Stock Markets to Have a Slow 2020, Will Investors Turn to Bitcoin and Crypto?
The past year saw the S&P 500 move up 25%, on an aggressive monetary policy that lifted optimism, as well as a potential breakthrough on the US-Chinese trade talks. But the bull market that formed last year may be much less decisive in 2020. S&P 500 is now above 3,140 points, mostly matching the early 2019 predictions.
Stocks in 2020 may return to single-digit returns, analysts believe. There are still no signs of the US entering a recession, though the global economy seems to be slowing. The Fed may also stop pumping liquidity into the market, leaving stocks to appreciate based on market principles. Still, the bull market may continue at a flatter rate, extending as the longest-running upward climb of assets in history.
Nancy Tengler, chief investment officer at Tengler Wealth Management, still believes stocks are a good basis for an investment strategy. 7
“We think the greater risk is not being exposed to equities,” Ms. Tengler said.
Others are less optimistic about the S&P 500 and the companies in the index.
“There is NO debate on S&P 500 forward earnings: a contraction appears imminent,” UBS strategist Francois Trahan said. He based his prediction on industrial indicators suggesting an economic slowdown.
So far, BTC has outperformed stocks, growing from the $4,000 level to steadily above $7,000. But the benchmark crypto is highly volatile, and earnings depend on the time period selected. Bitcoin, however, offers higher short-term volatility, inviting experienced traders that can make use of the significant daily price fluctuations.
The first-ever cryptocurrency will enter 2020 with a lot of unanswered questions. However, investing in BTC may lead to potentially higher gains for retail investors and even some institutional buyers.
The crypto community, in general, advises on holding one Bitcoin. Although, BTC is still making very small forays into mainstream investment. In theory, institutions have the chance to hold onto BTC through custodial services, offered by Coinbase or Bakkt.
But retail interest remains relatively low, not returning to the peak levels of 2017 when daily price spikes made buyers discover Bitcoin and overinvest.
Do you think stock market investors will turn to bitcoin in 2020? Share your thoughts in the comments section below!