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Bitcoin and Ethereum surged this morning, breaking free from the September curse. Will they lead the stock market in a rebound for the fourth quarter?

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Bitcoin and Ethereum surged this morning, breaking free from the September curse. Will they lead the stock market in a rebound for the fourth quarter?

On the first working day of October, both Bitcoin and Ethereum saw a sudden surge this morning. Ram Ahluwalia, CEO of asset management company Lumida, commented that this could be due to seasonal factors. Will the cryptocurrency prices, as he predicted, serve as a leading indicator and rebound before the stock market?

Breaking the September Curse, Will BTC and ETH Lead the Rally?

According to a report by The Wall Street Journal, September traditionally marks the weakest month for U.S. stocks. Since 1928, the S&P 500 index has only had a 44.8% chance of rising in September, the only month with less than a 50% probability. The average decline in September is -1.12%.

This September, the stock market performance has been below average, with the S&P 500 index falling by 4.9% and the tech-heavy Nasdaq index dropping by 5.8%. However, this morning saw a sudden surge in Bitcoin and Ether, with a 3% increase in the last 24 hours, and a monthly increase of 8.21% and 5.53% respectively, far outperforming the major U.S. stock indices. As we enter the fourth quarter, could cryptocurrency prices become a leading indicator and spark a rally?

Ram Ahluwalia's Three Key Indicators Signal a Shift in Market Sentiment

Ram Ahluwalia, CEO of asset management firm Lumida, discussed his tactical asset allocation at the end of September, focusing on three key indicators:

  1. U.S. Dollar Index: The U.S. dollar has been strengthening for 10 consecutive weeks, and he expects risk appetite to not recover until the end of the dollar rally.
  2. Semiconductors SMH: The SMH index, representing the AI narrative, has not shown strength yet, but he anticipates a recovery in the fourth quarter.
  3. U.S. 10-Year Treasury Bonds: The current narrative is "higher for longer." A few months ago, the market expected around 6 rate cuts by 2024, but now it has reduced to 2 cuts. Is there a possibility that the market will shift to no rate cuts expectation?

In his latest tweet, he pointed out that according to a report by Goldman Sachs, hedge funds have purchased tech stocks for the first time in seven weeks, covered their short positions in semiconductors, and sold energy stocks. The U.S. dollar has been rising for 11 consecutive weeks and is already overextended. Market sentiment is starting to shift!

Will cryptocurrency prices, as he predicts, act as a leading indicator, rebounding ahead of the stock market and delivering impressive results in the fourth quarter as history repeats?