• US stocks plunged Monday before paring losses later in the week, experts say don’t get comfortable, though
  • Analysts from Charles Schwab and Guggenheim say a 10%-15% correction is coming in the fall

Monday’s market tumble may be foreshadowing a troubling move for US stocks. Equities are poised to crash 10% or more in the coming months, analysts say. 

Charles Schwab’s chief investment strategist Liz Ann Sonders sees a 10% or more correction,  according to a recent Insider interview.

Scott Minerd, chairman and chief investment officer of Guggenheim Investments, agrees. He sees a 15% crash before the end of October, he told Bloomberg recently. 

Stocks bounced back on Tuesday and Wednesday after Monday’s dip, but Sonders and Minerd warn investors not to get too comfortable. Stimulus checks have been sent and the Fed is likely to start bond purchase tapering soon, leaving the current rally without two of its main pillars. 

Riskier assets, like bitcoin, are going to see the biggest corrections, the analysts predict. 

“We are coming into a seasonally difficult time for risk assets, and there might be a better entry point if you want to get involved in high-yield credit than where we are today,” Minerd said during the interview.

Bitcoin bears vs bulls

Minerd went on to say that he predicts bitcoin dropping as low as $15,000. In past cycles, bitcoin tends to lose 80% during a bear market, but with new competing coins and uncertainty around regulation, there might be a steeper dip coming soon, he said.

Bitcoin fans, however, are still bullish. The largest digital currency rose around 8% Wednesday following remarks from Elon Musk, Cathie Wood and others at the virtual “The B Word” event hosted by the Crypto Council for Innovation.

Musk admitted to personally holding digital assets and assured bitcoin holders that electric vehicle company Tesla would resume accepting bitcoin soon if mining with renewable energy continues to grow. 

“From investors’ perspective, Musk publicly confirming his own exposure to both bitcoin and ethereum for the first time, while also stating that SpaceX also holds bitcoin on its balance sheet, provides renewed confidence in Musk as an advocate for bitcoin,” said Ulrik K.Lykke, executive director at digital assets hedge fund ARK36. “However, the jury is still out on whether this positive spark will bring enough confidence to change the direction of the markets. Investors should still be attentive to the risk and realize that this may indeed not be enough to bend the current downwards momentum.”

In the near term, however, equities are largely safe. Analysts expect a drop to come in the fall. 

“Going forward, Covid headlines can still cause volatility, as can earnings warnings about margins or commentary about changes in behavior, but for the most part the macro outlook for stocks and risk assets remains positive in the near term, just like it was before Monday’s drop,” said Tom Essaye, founder of Sevens Report Research.

  • Blockworks
    Senior Reporter
    Casey Wagner is a New York-based business journalist covering regulation, legislation, digital asset investment firms, market structure, central banks and governments, and CBDCs. Prior to joining Blockworks, she reported on markets at Bloomberg News. She graduated from the University of Virginia with a degree in Media Studies. Contact Casey via email at [email protected]