A new round of selling may hit the cryptocurrency market following warnings from Alexander Altmann, global head of equities tactical strategies at Barclays, about the sustainability of the ongoing US stock market rally.
Strategist expresses skepticism over US equities rebound
Alexander Altmann has issued a cautious outlook on the strength of the recent recovery in US equities, noting that the rally has failed to address several underlying weaknesses.
Altmann cited negative market breadth, subdued performance among growth stocks, only moderate recovery in neocloud stocks, continued weakness in crypto, and stagnation in quality factor assets as reasons for concern.
The strategist further observed that the enthusiasm surrounding artificial intelligence investments, which has fueled much of the US equity surge, may be reaching unsustainable levels.
Altmann described the market as entering a “denial phase,” warning that many investors are underestimating the risks facing the AI sector and tech-focused equities.
He also highlighted growing financial pressures on neocloud companies—firms providing cloud infrastructure for AI workloads—as an early indicator of broader industry stress.
Mini dictionary: Neocloud companies refer to newer technology firms that operate or specialize in providing advanced cloud computing services, particularly for high-performance workloads such as artificial intelligence.
Potential for large-scale equity and crypto outflows
Barclays has flagged the risks associated with volatility-sensitive investment strategies, which could amplify any decline in US stocks and—in turn—affect cryptocurrencies.
According to models used by Barclays, volatility-control funds may be compelled to liquidate as much as $135 billion in US equity futures if market turbulence continues within the next 24 to 48 hours after significant drops.
| Event | Potential Impact | Timeframe |
|---|---|---|
| Volatility-control funds selling | Up to $135 billion in US equity futures | Next 24-48 hours after market drop |
This impending risk underscores why Altmann and Barclays do not believe in the resilience of the current equity rally. Ongoing crypto price weakness is seen as part of these broader financial market stresses.
AI frenzy and crypto market outlook
Barclays has been one of the few major Wall Street institutions to question whether events such as the US midterm elections would bring lasting benefits to stock prices.
Altmann argued that investors continue to underestimate the potential downside to sectors driven by speculative optimism, including both AI and crypto assets.
He noted increasing signs of early industry stress, particularly with elevated financing pressures impacting the technology and digital asset spaces.
With market volatility expected to remain high, both the traditional and cryptocurrency markets could see further price swings if current trends continue.
