Medium-sized companies have crumbled down, and Decay is gaining field on large ones. Users would be going through the euphoric momentum of the bubble before experiencing the beginning of the fall.
Since early 2021, the financial analyst and investment adviser Alberto Cárdenas expressed his concern and advised that the most prominent risky stocks would start to crumble down since a bubble was about to explode due to the most remarkable stimulus in financial history, which took place in 2020.
Through his Twitter, Cárdenas highlighted that deflating the bubble lasts at least 20 months, for which users must be aware of the behavior of currencies until March of the upcoming year.
The expert also highlights that following the structure given by James Montier regarding the archetype of a bubble, the riskiest currencies would crash first (such as the one named SPACs,) companies created to collect funds for the acquisition or merger with already existing entities. It also points at the ARKK exchange-traded fund or ETF, created with shares belonging to risky companies, had shown losses this year.
Indices Are about to Decline
According to Cardenas, the argument that focuses on the riskiest falling first is not new. He expressed that the $EEM, which started to deal with a decline in February 2021, and $IWM, which includes small-cap stocks, has been deforming and crumbling down since November 2021.
Among the first Wall Street indices, Nasdaq ranked as the first entity that would crumble down in November 2021, while the S&P 500 has been decaying since January. The expert also points out that Russia-Ukraine warfare is not the leading cause of the fall in the main stocks.
Russia’s invasion of Ukraine has worked as some catalyst to boost a momentum that was already on its way since last year. The previous bubble is the leading cause of the one happening right now.
The quick rise of 2020 and 2021 approached a limit line before the markets began to decay, but it is a procedure that would take too much time, months perhaps.
How Does this Situation Impact Bitcoin?
Cárdenas expressed that users still count on many elements of euphoria from last year, but it does not feel as intense as before. Today users would tend to approach complacency more than euphoria. These terms, euphoria, and complacency, identify the levels before and after coming to the maximum status of the bubble.
As for other currencies that might represent a risk, the expert clarified that the S&P 500 is one of the points that takes the longest to get properly fixed. Due to this situation, it would go between the two levels mentioned, although closer to complacency.
By: Jenson Nuñez
