Another wave of selling could still be in store for the cryptocurrency market, after a senior strategist at Barclays questioned whether the recent rebound in U.S. stocks can last.

Alexander Altmann, global head of equities tactical strategies at the British bank Barclays, said he is somewhat skeptical of the strength of the stock market recovery that followed a brutal sell-off, a downturn that has also dragged cryptocurrencies lower.

Among the warning signs he cited are negative market breadth — a pattern in which declining stocks outnumber advancing ones, a classic sign that an index's gains are resting on narrow participation — mediocre performance from growth stocks, only a modest rebound in neocloud stocks, the ongoing crypto slump, and a flat quality factor, meaning investors are not rewarding companies with stronger fundamentals.

Altmann's concerns come amid growing unease that the AI investment frenzy, which has been a key driver of U.S. equity market performance, may prove unsustainable. He was one of the few Wall Street strategists to question whether the U.S. midterm elections would deliver lasting benefits for stocks.

The bank has also flagged the risk that volatility-sensitive investment strategies could deepen the market decline. According to Barclays' models cited in Bloomberg's report, volatility-control funds may be at risk of dumping as much as $135 billion of U.S. equity futures in the 24 to 48 hours following Thursday's market mayhem. Such funds mechanically adjust their equity exposure as volatility shifts, meaning sharp price swings can trigger outsized selling flows driven by preset rules rather than by discretionary market views.

On the Oct. 29 episode of Bloomberg's Odd Lots podcast, Altmann argued that investors are in a “denial phase” regarding the risks facing the AI sector. He pointed to growing financing pressure on neocloud companies, which host the computing resources that power AI applications, as an early sign of stress in the industry.

Source: CryptoNewsNet