4 Minutes
Top economist flags heightened risk for stocks, gold, silver, and crypto
Mark Zandi, chief economist at Moody's, has issued a forceful warning that stocks, precious metals and the crypto market face significant downside risk in the near term. Zandi cited a mix of slowing growth, expensive valuations, rising Treasury yields and rising market leverage as key vulnerabilities that could trigger a sharper correction for equities, gold, silver and major cryptocurrencies such as Bitcoin and Ethereum.
Market backdrop: volatility returns to risk assets
Over recent weeks both Bitcoin and many altcoins have slipped into technical bear-market territory while US stock benchmarks like the S&P 500, Dow Jones and Nasdaq 100 have traded in narrow ranges below recent highs. Gold and silver, which previously hit record levels, have also pulled back after sharp rallies. This clustering of weakness across asset classes has raised alarms among institutional and retail investors about whether current price moves reflect short-term profit taking or the start of a larger market unwind.
Why Zandi is concerned: growth, labor, and Treasury yields
Zandi points to several macro pressures. First, US real GDP growth has been running below potential, roughly a touch above 2% compared with a potential near 2.5%. Second, the labor market has cooled, with job gains under 200,000 last year and unemployment no longer trending lower. Third, long-term Treasury yields have climbed in recent months, making fixed income more competitive with stocks and increasing funding costs for leveraged strategies.
Valuations, complacency, and leveraged positions
The economist also warned about investor complacency. Many market participants have treated dips as buy-the-dip moments, assuming a swift rebound simply because that pattern has repeated in the past. Zandi said this rising speculation, combined with increased leverage among hedge funds, raises the odds of a forced deleveraging if prices reverse suddenly. Such a deleveraging episode could amplify declines across equities and the crypto market, where margin and derivatives exposure are significant.
Geopolitical and policy risks that could spark a sell-off
Zandi highlighted two major event risks that could accelerate volatility. One is the risk of military conflict in the Middle East, with the possibility of a US strike on Iran generating oil shocks, higher inflation and greater market turbulence. The second risk is trade policy uncertainty, including proposals for broad tariffs, that could disrupt global trade and weigh on corporate profits and investor sentiment. Either development would complicate the Federal Reserve's path for interest-rate cuts, sustaining higher rates and pressuring growth-sensitive assets.
Implications for crypto investors and traders
For crypto traders and investors, these dynamics matter because cryptocurrencies have displayed heightened sensitivity to macro signals. Bitcoin price moves have correlated with risk-on and risk-off flows, and spikes in Treasury yields or inflation expectations often trigger declines in crypto markets. Investors in spot Bitcoin, altcoins, DeFi protocols and crypto derivatives should therefore reassess leverage, rebalance exposure, and consider liquidity buffers as macro uncertainty persists.
Practical strategies amid uncertainty
Market participants can respond by diversifying across uncorrelated assets, trimming leveraged positions, and monitoring on-chain metrics alongside macro indicators such as Treasury yields, CPI prints and employment data. Conservative investors may prefer lower volatility allocations until clearer signs of economic stabilization appear, while traders might use volatility to implement risk-defined strategies such as hedged positions or option spreads.
Mark Zandi's warning is a reminder that cross-asset pressure can unfold quickly when valuation, policy and geopolitical risks converge. Whether the market experiences a brief correction or a deeper decline will depend on forthcoming economic data, Fed guidance on interest rates, and the evolution of geopolitical events.
Source: crypto
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