Report : Flash Crash looming as Crypto and Oil Market Slumps

According to a report by Reuters on Nov. 16, analysts from Bank of America Merill Lynch have said that the crash in cryptocurrency and oil markets are indicators of a looming ‘flash crash’ in markets.

The strategists reportedly suggests that rising volatility across various asset classes and delevraging are the signs of the evolution of a bear market such as that which happened in oil markets over the past weeks.

The market is started with another on Nov. 14 as Bitcoin (BTC) price slumped below $5,400 while total market capitalization of all cryptocurrencies dropped as low as $174 million. The slump or price dive marked a new volatile records for markets this year while the BTC volatility rate exceeded the index of seven on Bitcoin for the first time since April 2018.

Brent Crude reportedly hit an 8 month low, making it the most – extreme one day fall in over three years on Tuesday. As a result of the current bear market, cash has outperformed stocks and bonds this year for the first time since 1962.

Despite bearish signals, $122 billion has flowed into equities and $35 billion into money market funds and $24 billion into bonds as told by the analysts to Reuters. At the same time, markets saw large outflows from corporate bonds, where investment grade corporate bond funds lost $2 billion and high yield bond funds lost $2.3 billion.

The U.S. dollar will purportedly rise by the end of the current year and continue climbing further in the first quarter of 2019 before falling. According to the strategists , the “last Bulls Standing” are high – yield corporate bonds and the U.S. dollar.

Fundstrat analyst Rob Sluymer predicted that with Bitcoin’s collapse on Nov. 14, crypto markets were pushed into a “deeply oversold” area while “longer term technical indicators aren’t so favourable.” Sluymer concluded that once this significant damage which happened this week comes under control, Bitcoin would be able to support a “multi – month rally.”

Yesterday, Soichiro Tsutsumi who is a trader at e warrant Japan securities K.K. in Tokyo , told Bloomberg that the loss of $6,000 support looks like a “dangerous sign” for industry players, especially the ones with ” business models reliant on a client pool.