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S&P 500 Drops for Fifth Week as Crash Warnings Rise Amid Iran War Fears

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Brian Armstrong's Bold Prediction: AI Agents Will Soon Dominate Global Financial

TLDR:

  • S&P 500 posts fifth weekly loss as RSI drops below 30, signaling oversold market conditions.
  • Traders cite past crash patterns showing brief rallies before deeper declines in similar setups.
  • Iran conflict raises oil disruption fears, adding pressure to already weakening market sentiment.
  • Futures suggest a steady open near 6,400 despite growing bearish calls across trading circles.

The S&P 500 ended Friday at 6,368.85 after falling 1.7%, marking its fifth weekly loss in a row. Market signals show growing stress as geopolitical tension and technical indicators combine, leaving traders split on whether a deeper drop or short-term rebound comes next.

Technical Signals Stir Bearish Expectations

Recent market data shows the S&P 500 nearing correction territory after a steady decline over several weeks. The index has now dropped close to 9% from recent highs, raising caution among traders tracking historical patterns.

Relative Strength Index readings have fallen below 30, placing the market in oversold territory. Such levels previously appeared during major downturns, including the 2008 financial crisis and the 2020 pandemic-driven selloff. These comparisons have increased concern among market participants watching for similar price behavior.

Traders have intensified the bearish narrative. A widely shared message from Rekt Fencer warned of an imminent crash, urging traders to exit positions quickly. Another account, Midas, echoed a similar sentiment, reinforcing fears of a sharp decline.

Meanwhile, Ted Pillows outlined historical cycles where initial declines were followed by short rallies before deeper drops.

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According to his analysis, past crashes in 2008 and 2020 followed this pattern, with brief recoveries preceding larger sell-offs.

He noted that the current market has already declined about 9%, with potential for a temporary bounce before another leg down.

These views have gained traction as traders compare current price action to earlier downturn structures. However, not all participants agree with the bearish outlook, creating a divided market environment.

Geopolitical Tension and Market Uncertainty

The ongoing two-month conflict involving the United States and Iran has added pressure to financial markets. Concerns about potential oil supply disruptions continue to influence sentiment, especially as energy prices remain sensitive to geopolitical developments.

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Rising oil prices could contribute to inflation concerns, which may affect monetary policy expectations. Investors are closely monitoring how these external factors interact with existing market weakness. As a result, volatility has increased across major indices.

Despite the negative sentiment, some analysts point to the oversold condition as a possible setup for a short-term rebound.

Historically, markets often experience relief rallies after extended declines, especially when technical indicators reach extreme levels.

S&P 500 futures suggest a relatively stable open near 6,400, indicating that immediate panic selling may not materialize. This has led some traders to expect a temporary recovery before any further downside movement.

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At the same time, uncertainty remains elevated as market participants weigh technical signals against geopolitical risks. With both bearish and neutral expectations in play, trading activity continues to reflect caution rather than consensus.

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Crypto World

Lido DAO Mulls $20M LDO Buyback to Boost Token Price

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Lido DAO Mulls $20M LDO Buyback to Boost Token Price

Lido’s decentralized autonomous organization is considering a one-off $20 million buyback of its governance token to address so-called price dislocation, which is at “historically depressed levels” relative to Ether, according to the DAO. 

The proposal, submitted Friday, seeks permission to swap 10,000 Lido Staked Ether (stETH) tokens, currently worth $20 million from the DAO’s treasury for Lido DAO (LDO), arguing that LDO is undervalued.

“This is not a routine fluctuation. It represents one of the most significant dislocations between LDO’s market price and its underlying protocol fundamentals in the token’s history.”

A token buyback of this size could boost the price of the token, which has fallen roughly 96% from its all-time high. In November, a Lido DAO member pitched an automated buyback mechanism for LDO to improve the token’s price. However, that proposal hasn’t been implemented.

LDO’s change in price relative to ETH since 2024. Source: Lido DAO

Lido DAO pointed out that LDO is trading at a steep discount to Ether (ETH) at a ratio of 0.00016, roughly 63% below its two-year median.

This is despite the protocol holding the top spot of the Ethereum liquid staking market, with a 23.2% share of staked Ether, according to Dune Analytics data. The protocol’s dominance has even been flagged as a centralization risk to the network in previous years.

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Share of Ethereum network validators. Source: Dune Analytics

Related: Ethereum builders propose ‘economic zone’ to tackle L2 fragmentation 

LDO is currently trading at $0.30, down 95.9% from its $7.30 high set in August 2021, according to CoinGecko data. LDO’s $255 million market cap makes it the 141st largest token by value at the time of writing.

“That dislocation is not justified by a proportional deterioration in protocol performance,” Lido DAO said. 

Lido DAO proposes buying stETH in batches

Lido DAO proposed buying up to 10,000 stETH in smaller batches of 1,000 to buy LDO. 

Lido DAO said it would use limit orders or adopt a dollar-cost averaging strategy to avoid market volatility. 

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