To The Moon

The rebound in the crypto market the weekend before last ultimately proved to be nothing more than a flash in the pan. As both Bitcoin and Ethereum have gone on to set new recent lows, the overall rhythm of the market has started to clearly signal the arrival of a new bear market in cryptocurrencies.

Meanwhile, last week’s sharp pullback in silver after making a midweek high continued the sequential logic of the “three-horse carriage”: after the bull trap in precious metals, U.S. equities have become the only fortress that has not yet been breached by the bears. With a large batch of economic data due this week, plus important individual earnings reports, will this be the final straw that breaks the camel’s back?​

Among the three drivers of crypto, precious metals, and U.S. equities, the clear leading indicators have already been trending lower for quite some time and distance. This means that, at a minimum, the trend in this category has shifted from the previous bull market to a sideways, range-bound pattern, and in fact there are already plenty of signs pointing toward a bear market.​

What is particularly noteworthy is that the lower shadow on Ethereum’s weekly candle from the prior week was swallowed and exceeded in a very short period of time, something that has rarely been seen in past history. The lack of effective consolidation and rebound suggests that the selling pressure is even greater than previously expected.

Even if there is some short-term correction once the so‑called panic sentiment peaks, it will be very difficult for the entire space to return to its prior state after 10/11. Since October, the only viable overarching approach to the crypto market has been to sell into strength.​

Silver, for its part, staged another classic false breakout last week. While silver futures made a marginal new high, neither gold futures nor spot silver showed any follow‑through in the same direction. Gold has formed a textbook second rebound; once it clearly breaks back below 3900 again, it will essentially confirm that precious metals are set to follow the crypto market and move decisively weaker.​

For silver, the damage from this false breakout is likely to be even more severe. If 45.5 is broken, there is a real risk of an accelerated decline. Considering the way the gold–silver ratio has bottomed out and started to turn higher, as well as silver’s long‑standing tendency for its declines to accelerate, long gold and short silver will remain the preferred medium‑ to long‑term positioning.​

Finally, back to U.S. equities: as the most important “big brother” in resisting declines among risk assets, last week there was already a certain degree of divergence among the S&P, Nasdaq, Russell, and Dow. The S&P printed an inside‑bar pattern, clearly waiting for this week’s data and news flow to determine its direction.​

The Nasdaq, meanwhile, has already set a new short‑term low on the daily chart because of Nvidia’s poor performance last week (Nvidia’s weekly chart is also an inside bar).​

Looking at the previous two cross‑market moves, it is clear that U.S. equities are also just waiting for a trigger to break lower. According to Goldman Sachs, over the past two weeks all three of the stock market’s core bull‑market narratives—AI investment prospects, expectations of Fed rate cuts, and the sustainability of economic growth—have come under question. In this mix, the Federal Reserve’s role is, in this view, relatively limited, while AI is the centerpiece.​

Therefore, how the market trades after this week’s earnings reports and economic data will effectively set the tone for the rest of the year. A basic rule of thumb is that a break below last week’s lows would be a signal that the correction has begun. However, in terms of relative strength and weakness, U.S. equities are still unlikely to be the worst performer. Judging from volatility and potential risk, gold and silver may well face greater short‑term pressure.​

One more word on Nvidia: if this “big brother” breaks below 176 this week, it will not only bode ill for the stock itself, but is also likely to have a significant negative impact on U.S. equities more broadly, and is therefore worth watching very closely.

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