Seasoned trader and analyst Jason Shapiro reflected on Thursday’s sharp pullback in Bitcoin (CRYPTO: BTC) and the stock market, warning against going “aggressively long” on risk-on assets until year-end.
What Happened: In a video posted on his official YouTube channel, Shapiro said, "I will say something that nobody wants to say and nobody wants to hear, which is, I don’t think from now at least until year-end is a great time to be aggressively long risk assets."
Shapiro acknowledged the record highs scaled in both markets recently but argued against going long from a risk-to-reward perspective.
"It just doesn’t feel right to me. It starts getting too easy, and when it gets too easy is when it really is going to start getting hard," the experienced trader shared his thoughts.
Shapiro also questioned the market’s growing consensus on a “Christmas Rally” and a subsequent retracement in the new year.
"Well, who in their right mind is going to buy it into Christmas if they think it’s going to go down into January?"
For the uninitiated, Shapiro is known for his contrarian approach, which means going short during bullish euphoria and going long during bearish sentiment.
Why It Matters: Shapiro's bearish prediction comes amid a sharp retracement in both Bitcoin and Wall Street stocks.
While the world's leading cryptocurrency flash crashed to nearly $92,000 after breaking beyond $100,000 just a day earlier, major averages like the S&P 500 (NYSE:SPY) and the Nasdaq Composite (NASDAQ:QQQ) snapped their record-breaking streak by falling 0.19% and 0.17%, respectively.
According to TradingView, Bitcoin’s Sharpe Ratio, a measure of risk-adjusted returns, was 6 at the time of writing. This implied that investment in the cryptocurrency was generating positive returns above the risk-free rate.
Similarly, the S&P 500's Sharpe Ratio showed a reading of 1.13, indicating a better risk-adjusted return potential.
Price Action: As of this writing, Bitcoin was trading at $97,678.87, pulling back 4.85% in the last 24 hours, according to data from Benzinga Pro. The S&P 500 dropped 0.19% to end at 6,075.11 during Thursday's regular session.
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